TREASURIES-Prices gain, Fed meeting next week in focus

Reuters

* Prices rise, Fed seen unlikely to taper before 2014

* Fed policymakers to meet next Tuesday, Wednesday

* Treasury to sell $96 bln in 2, 5, 7-yr debt next week

By Karen Brettell

NEW YORK, Oct 25 (Reuters) - U.S. Treasuries prices edged up

on Friday as investors waited on new signs about the strength of

the economy, which is key to the timing of when the Federal

Reserve is likely to reduce the size of its bond purchase

program.

Treasuries have been largely rangebound since Tuesday, when

yields fell on data that showed employers hired fewer workers

than expected in September, stoking fears the economy was

slowing even before the government's 16-day shutdown.

A backlog of releases are now scheduled as the government

catches up on delayed data. The Fed is viewed as unlikely to

change it purchase program from $85 billion a month when it

holds its policy meeting next week, with most seeing the central

bank likely to maintain the same rate of purchases until next

March.

"The market continues to do better here in an environment

where the Fed is not tapering quantitative easing until sometime

in 2014," said Gary Pollack, head of fixed income trading at

Deutsche Bank Private Wealth Management in New York.

Benchmark 10-year notes were last up 2/32 in

price to yield 2.51 percent. The yields have fallen from 3.00

percent on September 5, before the Fed surprised investors by

leaving its bond purchase program unchanged.

The effects of the government shutdown and wrangling over

raising the debt ceiling are expected to linger for several

months, muddying insight into the economy.

"The economy looks a little disappointing and we're not

going to get a clear picture of what the economy is doing until

we get figures for the month of December, which come out in

January," Pollack said.

New orders for long-lasting U.S. manufactured goods outside

of transportation equipment fell in September in a possible sign

companies were holding back investments due to uncertainty over

government spending.

The Treasury will sell $96 billion in new coupon-bearing

supply next week, including $32 billion in two-year notes on

Monday, $35 billion in five-year notes on Tuesday and $29

billion in seven-year notes on Wednesday.

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