TREASURIES-Prices rise as economic data mixed, month end nears

Reuters

* Treasury to auction $35 billion in five-year notes

* Thin liquidity in holiday week exacerbates market moves

* Consumer confidence unexpectedly slips in November

By Luciana Lopez

NEW YORK, Nov 26 (Reuters) - Prices for U.S. Treasuries rose

on Tuesday as mixed economic data suggested the Federal Reserve

could continue its bond-buying program into the new year, though

analysts cautioned on thin liquidity because of the

holiday-shortened week.

Consumer confidence unexpectedly slipped in November, with

the Conference Board consumer confidence index at its lowest

since April.

"Consumer confidence came in significantly weaker than

expected. The market was looking for an increase, we got a

decrease," said Ian Lyngen, senior government bond strategist at

CRT Capital in Stamford, Connecticut.

"We did see a slight firming in the jobs component," he

said. "Mixed, but still consistent with this grinding bid we've

seen in the Treasury market this week."

In addition, while one closely-watched survey on Tuesday

showed U.S. single-family home prices posted their strongest

annualized gain in 7-1/2 years in September, another showed

gains in home prices eased.

"The net read from these (housing) data points is that the

back up in mortgage rates has stalled the housing market

recovery," said Steven Ricchiuto, chief economist at Mizuho

Securities USA in New York.

A subdued recovery, in turn, could encourage the Federal

Reserve to maintain its bond-buying program, which has been a

major support for Treasuries this year.

Trading is expected to be thin this week, as well, with the

bond market closed on Thursday for the Thanksgiving holiday and

closing early on Friday.

The benchmark 10-year Treasury note rose 9/32 in

price to yield 2.710 percent on Tuesday, compared to 2.7337

percent late on Monday.

The 30-year bond rose 18/32 in price to yield

3.804 percent on Tuesday, compared to 3.8221 percent late on

Monday.

Investors are scouring data releases to get a sense of the

health of the world's biggest economy and how much more - or

less - support Fed policymakers might be inclined to give.

With Fed officials now hinting for months that they are

looking to exit an $85 billion per month asset-buying program,

markets around the world have whipsawed back and forth as

investors see greater or lesser odds of such a tapering in

purchases happening sooner or later.

But perhaps the most important data for the Fed will not be

released until next Friday, Dec. 6: nonfarm payrolls. The Fed

wants to see the unemployment rate closer to 6.5 percent from

its current 7.3 percent.

Economists in a Reuters survey see that rate edging down to

7.2 percent in November.

The Fed has emphasized that any pullback in purchases will

be data-dependent, with policymakers desirous of seeing a

stronger, self-sustaining recovery in the job market first.

The upcoming change of leadership at the Fed also adds to

uncertainty: Janet Yellen, the current number two at the bank,

is expected to take over from Chairman Ben Bernanke early next

year.

A number of analysts say the central bank is likely to keep

rates lower for longer than previously expected next year to

help prop up the economy.

The Treasury will also sell $35 billion in five-year notes

on Tuesday, after having sold $32 billion in two-year notes on

Monday. The Treasury will also sell $29 billion in seven-year

notes on Wednesday.

"The 7-year auction tomorrow and possibly some early

month-end buying ahead of the Thanksgiving holiday and an early

close on Friday should lead to more flattening pressure in

coming days, but we look to use this to set up steepeners into

December as the trend steepening move continues into long-end

supply," said Richard Gilhooly, an interest rate strategist at

TD Securities in New York.

Portfolios managed against benchmark indexes often buy

longer-dated Treasuries around month-end.

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