TREASURIES-Prices gain as market awaits U.S. jobs data later in week

Reuters

* U.S. capital goods orders sank more than expected in

September

* October nonfarm payrolls due Friday, GDP due Thursday

* U.S. Treasury quarterly refunding announcement due

Wednesday

By Luciana Lopez

NEW YORK, Nov 4 (Reuters) - U.S. Treasury debt prices rose

slightly on Monday, retracing some of Friday's losses and

hemming yields within recent ranges as investors looked ahead to

key data later in the week as well as information on upcoming

Treasury debt sales.

Treasuries sank on Friday after stronger-than-expected

factory activity data belied views that the economy struggled

last month in the face of a partial shutdown of the federal

government during the first half of October.

While the shutdown was expected to drag on the economy, the

manufacturing data suggested the damage might have been

contained. Data this week may confirm that resilience or could

underscore the vulnerability of the economy.

"There's a lot of short-term risk, depending on whether data

surprises to the upside," said Robert Tipp, chief investment

strategist at Prudential Fixed Income, in Newark, New Jersey.

Data early in the week disappointed as orders for a wide

range of U.S.-made capital goods sank more than previously

estimated in September, a sign that companies cut their

investment plans sharply as Washington hurtled toward the brink

of default.

"The area of concern is non-defense cap orders ex-aircraft,"

said Scott Brown, chief economist at Raymond James in St.

Petersburg, Florida.

"It's pretty weak in August and September. For GDP, it's a

proxy on business and consumer spending, and it implies pretty

lackluster growth," he said.

U.S. third-quarter gross domestic product data are due on

Thursday. Those figures will help show how strong momentum was

in the economy before the government shutdown in October, which

was sparked by Republican efforts in Congress to undermine

President Obama's signature healthcare law as a condition of

funding the government.

And on Friday, the closely-watched October nonfarm payrolls

will be released. These key U.S. economic reports were delayed

because of the shutdown and are among the most important data

for weighing future Federal Reserve monetary policy.

Fed policymakers want to see the unemployment rate dropping

closer to 6.5 percent from the current 7.2 percent, but

economists in a Reuters survey expect that rate to have edged up

in October to 7.3 percent.

The Fed recently kept in place its $85-billion-per-month of

mortgage-backed securities and Treasuries buying, although a

statement from policymakers concluding a two-day meeting had a

more hawkish tinge than some had expected.

As a result, analysts broadly expect the Fed to begin

tapering those asset purchases later than expected, perhaps well

into 2014 rather than by the end of this year.

Treasuries could remain rangebound in coming sessions, with

investors reluctant to take on large positions until they have

more certainty on the momentum in the economy.

"This week, neutral data should lead to a 2.50 percent to

2.75 percent trading range on 10-year notes," said Chris Bury,

head of U.S. rates trading and sales at Jefferies & Co.

Prices for U.S. benchmark 10-year Treasury notes

rose 7/32 in price on Monday to yield 2.596 percent, compared to

a yield of 2.62 percent late on Friday.

The U.S. 30-year bond rose 9/32 in price to

yield 3.680 percent, compared to a yield of 3.696 percent late

on Friday.

In addition, the U.S. Treasury on Wednesday will issue its

quarterly refunding announcement, which will lay out funding

needs for the next quarter and tell investors how much U.S. debt

will be auctioned off by the government.

The Federal Reserve on Monday bought $3.718 billion in

Treasuries maturing August 2019 through June 2020 as part of its

ongoing stimulus program.

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