April 30, 2019 / 1:22 PM / 2 months ago

TREASURIES-Yields steady as better European data offsets Chinese weakness

    * Euro zone growth beats expectations
    * Chinese factory surveys show slower growth
    * Fed meeting on Wednesday in focus

    By Karen Brettell
    NEW YORK, April 30 (Reuters) - U.S. Treasuries were little
changed on the day on Tuesday after prices gained overnight on
weak Chinese data and but then gave it back on
better-than-expected euro zone economic growth.
    Official and private business surveys suggested slower
Chinese factory growth this month, dashing hopes for a steady
reading or even a faster expansion. Data also showed a slower
expansion in China's services sector.                          
    Euro zone growth, meanwhile rebounded strongly from a slump
in the second half of 2018, while unemployment fell to its
lowest rate in more than a decade.             
    "Once again, it's been about global data," said Justin
Lederer, an interest rate strategist at Cantor Fitzgerald in New
York. "Overnight we started higher (in price) on weaker Chinese
data and then it completely reversed course as European data was
better than expected."
    The next major U.S. focus for the market will be the
conclusion of the Federal Reserve's two-day meeting on
Wednesday.
    Fed Chairman Jerome Powell will give a news conference after
the Fed statement, and investors will be looking for indications
on how the U.S. central bank views market pricing of further
rate moves.
    Interest rate futures traders are currently pricing in a 61
percent chance of an interest rate cut by December, according to
the CME Group's FedWatch Tool.
    Traders also are focused on whether the U.S. central bank
cuts the interest it pays on excess reserves (IOER) in a bid to
prevent the federal funds rate from drifting higher, as some
analysts expect.             
    The Treasury Department will also announce its refunding
plans for the coming quarter on Wednesday. 
    It said on Monday that it plans to borrow much less in the
second quarter than it previously expected. Treasury said it
will borrow $30 billion during the April-June period, less than
half its previous estimate.             
    Jobs data for April released on Friday will be closely
watched for further indications of wage pressures and the
strength of the labor market.

 (Reporting by Karen Brettell; Editing by Will Dunham)
  
 
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