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TREASURIES-Prices fall as stock strength reduces demand for bonds
December 20, 2016 / 2:21 PM / a year ago

TREASURIES-Prices fall as stock strength reduces demand for bonds

* Rising stocks reduces demand for bonds
    * Rate outlook main focus for investors
    * Personal income, GDP data on Thursday in focus

    By Karen Brettell
    NEW YORK, Dec 20 (Reuters) - U.S. Treasury prices fell on
Tuesday as risk assets including stocks were stronger, reducing
demand for safe haven assets, and with no new economic due to
give further indications of the strength of the U.S. economy.
    Bond prices had rallied on Monday as some investors covered
short positions and as terrorism concerns promoted by the
shooting of the Russian ambassador in Turkey and a truck attack
on a Berlin Christmas market raised demand for low-risk bonds.
    U.S. stocks were nonetheless tentatively stronger on
Tuesday, while European stocks held near their highest levels
since January. 
    "The main reason for the increase today is the little bit of
'risk on' trading that buoyed European stock exchanges," said
Jim Vogel, an interest rate strategist at FTN Financial in
Memphis, Tennessee.
    Benchmark 10-year notes were last down 10/32 to
yield 2.58 percent, up from 2.54 percent late Monday.
    Investors are skittish to buy bonds on concerns about
further yield increases as they evaluate how many times the
Federal Reserve is likely to raise interest rates next year.
    Hawkish comments by Fed Chair Janet Yellen on the state of
the job market on Monday sent yields briefly higher, even as
bonds were generally stronger.
    It came after the U.S. central bank's meeting last Wednesday
was viewed as more hawkish than expected, sending 10-year note
yields to more than two-year highs and two-year note yields to
their highest levels since 2009.
    "That was a basic repetition of almost anything she would
have said on the topic last Wednesday ... that's the sort of
sensitivity" investors have to hawkish rate statements, Vogel
said.
    Data on Thursday, including the third estimate of
third-quarter gross domestic product and personal income and
spending, will next be watched for further indications about the
strength of the U.S. economy.

 (Editing by Bill Trott)

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