TREASURIES-Prices rise as market awaits U.S. jobs data

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 Ellen Freilich

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

modestly on Monday, retracing some recent 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 a stronger-than-expected

view of factory activity alleviated some concern about the

negative impact on the economy of the partial shutdown of the

federal government during the first half of October.

A report on actual factory orders in September, released on

Monday, was less upbeat, with the three-month annualized rate

for orders of non-defense related capital goods, excluding

aircraft, down 7.2 percent, from the second-quarter average.

The weakness in those orders was interpreted as a sign

companies cut their investment plans sharply as Washington

hurtled toward the brink of default.

While the orders data were essentially bond-friendly, the

market looked toward this week's Treasury refunding announcement

and the October U.S. payrolls report.

"The market largely is just marking time ahead of the

refunding announcement on Wednesday morning and the employment

report on Friday," said John Canavan, fixed-income analyst at

Stone & McCarthy Research Associates.

The modest gains in prices merely reversed some of the

ground lost last Thursday and Friday, he said.

"The market had a little bounce as we settled into ranges

today," he said. "The price action was not greatly affected by

the factory orders release or anticipation of a weak payrolls

report on Friday. It was more a matter of pushing paper around

and waiting for another reason to move."

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 October government shutdown, which was

sparked by Republican efforts in Congress to undermine President

Obama's signature healthcare law.

And on Friday, the closely-watched October non-farm 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.

"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.

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 purchases, 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 2.60 percent, compared to

a yield of 2.62 percent late on Friday.

The U.S. 30-year bond rose 2/32 in price to

yield 3.696 percent, versus 3.704 percent late on Friday.

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 by the government.

The Treasury will sell three-, 10- and 30-year securities

next week and Treasury officials could also offer more

information on its plans to sell floating rate notes in 2014.

A special question the Treasury asked dealers who underwrite

U.S. debt auctions concerned their views on the conduct of the

Treasury's sales of five-year Treasury Inflation Protected

Securities (TIPS), Canavan noted.

"There's potential for some discussion in the Treasury's

refunding announcement about that issue," Canavan said.

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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