* Prices rise, Fed seen unlikely to taper before 2014
* Fed policymakers to meet 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 rose on
Friday as investors waited for new signs about the economy's
strength, which could influence the timing of the Federal
Reserve's initial reduction of its bond-buying stimulus.
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 in October.
A backlog of releases are now scheduled as the government
catches up on issuing 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
"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 5/32 in
price to yield 2.50 percent. The yields have fallen from 3.00
percent on Sept. 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
U.S. consumer sentiment also dropped in October to its
lowest level since the end of last year as consumers worried
that congressional dysfunction and the partial government
shutdown would hurt growth, a survey released on Friday showed.
After the rally that has sent 10-year yields down by half a
percentage point in two months, further yield declines will
depend on data or new signs from the Fed that it is taking a
more cautious stance on the economy.
"There's a lot of dovishness in the market already," said
Richard Gilhooly, an interest rate strategist at TD Securities
in New York.
"In order for us to rally and extend the range to lower
yields you either something even more dovish coming out of the
Fed next Wednesday, or you need to have a significant weakening
in the economic data, which we haven't seen," he said.
The Treasury will also 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.
- Budget, Tax & Economy