May 30, 2013 / 1:22 PM / 4 years ago

TREASURIES-Prices pare losses on jobless data, down before supply

* Prices pare losses after jobless claims rise
    * Prices stay slightly lower before 7-year note sale
    * Fed will buy $1.25 bln to $1.75 bln bonds due 2036-2043

    By Karen Brettell
    NEW YORK, May 30 (Reuters) - U.S. Treasuries pared price
losses on Thursday after data showed the number of Americans
filing new claims for unemployment benefits unexpectedly rose
last week, but bonds remained down ahead of a new sale of
seven-year notes.
    Investors are increasingly sensitive to economic data since
Federal Reserve Chairman Ben Bernanke said last week that the
U.S. central bank may decide to taper its program of buying
Treasuries and mortgage-backed securities within the next few
Fed policy meetings if data shows the economy is gaining steam.
    Yields have surged this month on improving economic
sentiment and as investors sold bonds on concerns about losses
should the Fed pull back on its massive bond purchases.
    Data also showed that a drop in government spending dragged
more on the U.S. economy than initially thought in the first
three months of the year. 
    "We're very hyper-sensitive to the employment side of
things, though the GDP's an old number," said Tom Tucci, head of
Treasuries trading at CIBC in New York.
    The recent backup in rates may help the Treasury sell $29
billion in seven-year notes on Thursday, the final sale of $99
billion in new coupon-bearing debt this week. The government saw
strong demand on Wednesday for a $35 billion auction of
five-year notes.
    "Yesterday we had a real bid come back into the market. Now
it looks like we're going to gravitate to possibly higher prices
but we do have to take this seven-year note out of the way,"
said Tucci.
    Benchmark 10-year notes were last down 4/32 in
price to yield 2.13 percent, after rising as high as 2.16
percent before the data. 
    The yields have surged from 1.61 percent at the beginning of
May, and reached a 13-month high of 2.24 percent in overnight
trading on Wednesday.
    Thirty-year bonds were down 3/32 in price to
yield 3.27 percent, after rising to 3.29 percent before the
data. These yields rose as high as 3.37 percent on Wednesday,
and have increased from 2.81 percent at the beginning of May.
    The Fed will buy between $1.25 billion and $1.75 billion in
debt due 2036 and 2043 on Thursday as part of its bond purchase
program.

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