TREASURIES-U.S. bond prices gain on worries about global economy
* China's July exports grow less then expected * Yields on U.S. Treasury debt rise for the week * U.S. CPI, retail sales data expected next week By Chris Reese and Luciana Lopez NEW YORK, Aug 10 (Reuters) - U.S. Treasury debt prices rose on Friday, recovering somewhat from losses earlier in the week, as concerns about global growth spurred safe-haven buying and investors looked ahead to U.S. inflation and retail sales data next week. Investors also bought U.S. government debt after the Treasury auctioned $72 billion of coupon-bearing securities in its quarterly refunding this week. The economic worries were sparked by weaker-than-forecast Chinese trade and other data. "It seems to be another risk-off type of move. The big component was the weak data out of China, which exacerbated fears of a global slowdown," said Kim Rupert, managing director of global fixed income analysis at Action Economics in San Francisco. China's exports grew 1.0 percent year-on-year in July, far below market expectations of an 8.6 percent rise, while imports grew 4.7 percent, against a 7.2 percent forecast. The benchmark 10-year U.S. Treasury note rose 11/32 in price to yield 1.657 percent, down from 1.69 percent late Thursday. Thirty-year Treasury bonds were trading with a yield of 2.746 percent, down from a high yield of 2.83 percent in an auction of $16 billion of the bonds on Thursday. Next week investors will focus on reports on July U.S. retail sales, expected to rise 0.3 percent, and consumer prices, expected to gain 0.2 percent. "They generally should be fairly positive data," said Kevin Cummins, an economist at UBS Securities in New York. "That should add to some better tone of data that we've gotten recently." But lingering questions remain about whether the U.S. Federal Reserve could launch another round of quantitative easing to prop up the sluggish economy, Cummins said. Despite improved U.S. hiring last month, most Wall Street economists still expect the Federal Reserve to do more to stimulate growth this year, with the majority looking for action as soon as September. The Treasury's sales of 3-year, 10-year and 30-year securities this week were met with tepid demand. "Treasuries have had a bit of a tough week, and you're seeing a bit of a comeback here, giving buyers a bit of a chance," Rupert said, adding that "the auctions are out of the way and that is helping." Safe-haven interest also supported Treasuries on fears about the debt crisis in Europe and worries that Spain and Italy may require massive financial bailouts. Economists said even stalwart Germany was stalling economically and could fall into recession in the second half of this year. Uncertainty over when the European Central Bank will resume bond purchases and how effective this will be in lowering Spanish and Italian yields, and easing the euro zone's debt crisis, has underpinned safe-haven Treasuries. Despite higher prices on Friday, benchmark yields are up for the week from 1.57 percent late last Friday, and have been rising steadily since touching a record low of 1.38 percent on July 25. "We think we can go a little bit higher from here in terms of how high Treasury yields can go, but there is going to be a cap because of everything happening in the world," said Scott DiMaggio, director of global fixed income with AllianceBernstein in New York. "Yields were driven to historical lows in the U.S., Germany, the UK and several other countries, so the market got itself very long," DiMaggio said, adding that comments from ECB President Mario Draghi committing to take whatever measures necessary to save the euro zone had undermined Treasury debt prices and pushed yields higher in recent weeks. However, global economic uncertainty will likely mean yields will remain at historic lows in coming months, DiMaggio said. "Treasuries are going to remain anchored," he said. "Can we get to 1.75 percent? Can we get to 2 percent? Yes, probably, but we think 2 percent would be a cap."
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