TREASURIES-Prices gain before double Fed purchases

December 9, 2013

* Fed to buy bonds in two buybacks, prices rise

* Treasury to sell $64 bln in 3, 10, 30-yr notes this week

* Fed meeting next week in focus for signs of tapering

By Karen Brettell

NEW YORK, Dec 9 (Reuters) - U.S. Treasuries prices edged up

on Monday before the Federal Reserve planned to make two

separate bond purchases and as investors focused on when the

U.S. central bank is likely to pare back this

$85-billion-a-month buying program.

The Fed will buy between $1.25 billion and $1.75 billion in

bonds due between 2036 and 2043 as well as $2.75 billion and

$3.50 billion in notes due 2021-2023 on Monday as part of its

ongoing purchases.

The buybacks are helping support the market even as many

investors remain nervous over when the U.S. central bank is

likely to scale back purchases.

Stronger economic data, including Friday's employment

report, have led many investors and analysts to bring forward

expectations on when the Fed could taper to January and many

traders have begun pricing for the possibility that the Fed

could act as early as next week when the Fed meets for the final

time this year.

Jim Vogel, an interest rate strategist at FTN Financial in

Memphis, Tennessee, sees the market as pricing in an approximate

75 percent chance of tapering this month. If the Fed does not

act, traders will then be scouring the language from next week's

Fed statement to see if a move in January is likely, he said.

"We're almost at the point now where the market will be

ready, particularly once it gets past the auctions this week, to

start really thinking about interpreting the Fed," Vogel said.

Benchmark 10-year notes were last up 4/32 in

price to yield 2.85 percent, down from 2.88 percent late on


The Federal Reserve will begin reducing its massive

bond-buying program no later than March, according to a Reuters

poll of 18 of the 21 primary dealers conducted Friday.

With a relatively light economic calendar, the Treasury's

sale of $64 billion in new coupon-bearing debt this week will

likely take focus this week.

The sales will include $30 billion in three-year notes on

Tuesday, $21 billion in a 10-year reopening on Wednesday and $13

billion in a 30-year reopening on Thursday.

Retail sales data on Thursday will also be watched for signs

of strength in consumer spending.