By Luciana Lopez
NEW YORK, July 24 (Reuters) - Prices for safe-haven U.S.
Treasuries dropped on Wednesday as economic data pointed to a
surprise expansion in the euro zone private sector, with
investors eyeing a sale of U.S. debt later in the session.
Private industry in the euro zone expanded for the first
time in more than a year in July, with a jump in Markit's
'flash' Eurozone Composite PMI to 50.4.
The data helped drive investors into riskier assets such as
stocks, said Andrew Wilkinson, chief economic strategist with
Miller Tabak & Co. LLC. in New York.
'Likewise, the yield on the 10-year U.S. note has once again
rejected sub-2.50 percent levels on signs of growing risk
appetite,' he added.
In addition, sales of new U.S. single-family homes vaulted
to a five-year high in June, showing little signs of slowing in
the face of higher mortgage rates.
'The housing sector of the economy is better than we thought
with the final data in for June,' said Chris Rupkey, chief
financial economist with Bank of Tokyo-Mitsubishi UFJ in New
The benchmark 10-year note dropped 19/32 in
price on Wednesday to yield 2.577 percent, from 2.507 percent
late on Tuesday.
The 30-year bond dropped 30/32 in price to yield
3.637 percent, up from 3.58 percent late on Tuesday.
Investors were also awaiting a $35 billion auction of
five-year notes scheduled for 1 p.m. (1700 GMT).
'The continued cheap funding should help spur demand from
investors wishing to put on carry trades, which are getting back
in vogue,' said Nomura analysts in a note to clients.
The U.S. Treasury sold $35 billion in two-year notes on
Tuesday in a sale analysts called uneventful. Capping the $99
billion in new intermediate debt issuance this week, the
Treasury will sell $29 billion in seven-year notes on Thursday.
With little significant economic data scheduled for this
week, markets are waiting for two key events in the coming week:
a two-day policy meeting by the U.S. Federal Reserve and July
nonfarm payrolls data.
The Fed meets on Tuesday and Wednesday, and investors will
scour the statement on the second day for any hints of when the
bank might begin slowing its $85-billion-per-month purchases of
Treasuries and mortgage-backed securities.
Most economists continue to expect that the Fed will begin
to reduce its bond buys in September, though some have pushed
back their expectations to later in the year.
The payrolls data are due on Aug. 2. The health of the labor
market will play a major role in the Fed's decision to pull back
on bond buying.
Policymakers want to see the unemployment rate closer to 6.5
percent from its current 7.6 percent.
(Editing By Andrew Hay)
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Keywords: MARKETS USA BONDS/
(-------MARKET SNAPSHOT AT 10:45 a.m. EDT (1445 GMT)------- Sept T-Bond 134-07/32 (-27/32) Sept 10-Year note 126-15/32 (-16/32) Change vs Current Nyk yield Three-month bills 0.03 (+0.01) 0.030 Six-month bills 0.065 (unch) 0.066 Two-year note 99-26/32 (-10/32) 0.344 Five-year note 100-01/32 (-09/32) 1.370 10-year note 92-28/32 (-19/32) 2.577 30-year bond 86-07/32 (-30/32) 3.637 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 15.75 (-1.50) U.S. 3-year dollar swap spread 16.75 (+0.50) U.S. 5-year dollar swap spread 18.50 (unch) U.S. 10-year dollar swap spread 19.75 (-0.25) U.S. 30-year dollar swap spread -2.75 (-0.25))
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