TREASURIES-Bonds keep firm tone after volatile week
* Modest supply relief sets in
* Most economic data helps market's recovery
* Market shrugs off improving consumer sentiment (Adds quote, background)
By Burton Frierson
NEW YORK, May 29 (Reuters) - U.S. Treasuries rose on Friday with the help of soft economic data and relief over a pause in government bond auctions, but the market remained vulnerable as it closed in on its worst sell-off since 2003.
As was the case six years ago, hopes of economic recovery have hurt conservative investments such as government bonds, though this time around worries over the burgeoning U.S. budget deficit have also hammered Treasuries.
Huge borrowing needs produced $101 billion of government note auctions this week alone, which matched a record set in April and added to the flood of debt saturating the market.
The sharp and swift rise in yields has fed on itself recently, forcing a wave of selling from mortgage investors that now appears to have run its course, while traditional month-end buying has also helped reverse falling bond prices.
"All the factors that were leading us down have withdrawn and we're starting to see some real buying," said Rick Klingman, managing director of Treasury trading at BNP Paribas in New York. Continued...
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