* Yellen's Fed Chair nomination hearing in focus
* Yellen backs current easy Fed policy to support economy
* U.S. to complete refunding with $16 bln 30-year bond sale
* Fed to sell $13 billion 10-year TIPS next week
By Richard Leong
NEW YORK, Nov 14 (Reuters) - U.S. Treasury debt prices rose
on Thursday as views from Federal Reserve Vice Chair Janet
Yellen at her Senate panel hearing on her nomination to head the
U.S. central bank were perceived as bond friendly, stoking bids
for government debt.
The Fed Chair nominee told the Senate Banking Committee that
while the central bank's bond purchase program will not go on
forever, it is important not to end it prematurely since the
economy is still fragile.
"Today is all about Yellen and whether she stays on the
dovish side," said Jason Rogan, managing director of Treasuries
trading at Guggenheim Partners in New York.
After Yellen's hearing, investors will contend with the last
leg of this week's $70 billion quarterly refunding with a $16
billion sale of 30-year bonds at 1 p.m. EST (1800
The 30-year supply follows back-to-back solid auctions of
three-year and 10-year notes on Tuesday and Wednesday.
Investors view Yellen, along with out-going Fed Chairman Ben
Bernanke, as a strong proponent of the Fed's current ultra-loose
monetary policy. They reckon a Fed under Yellen's leadership
will continue this stimulative stand with the goal to lower
unemployment and to raise inflation.
"I believe that supporting the recovery today is the surest
path to returning to a more normal approach to monetary policy,"
Yellen said in prepared remarks released late Wednesday.
Since her prepared remarks to the Senate Banking Committee
hearing into her nomination on Thursday were known, traders were
tracking Yellen's replies to questions on quantitative easing
and the interest rate outlook from the Senate panel.
"She has always been on the dovish side. It's not surprising
she says that quantitative easing is still necessary," said
Sharon Stark, chief fixed income strategist at D.A. Davidson in
Analysts also attributed the market gains largely to traders
exiting bets on lower prices spurred by an encouraging jobs
report last Friday, rather than a wave of bullish bets on
On the open market, benchmark 10-year Treasury notes
were 13/32 higher in price with a yield of 2.702
percent, down 5 basis points from late on Wednesday.
Thirty-year bonds were up 27/32 after gaining
more than 1 point. Their yield fell to 3.779 percent, down 5
basis points from Wednesday's close.
Longer-dated yields have retraced more than half of the
October jobs data-related increase, with the 10-year yield
testing its 50-day moving average in the 2.68 percent area.
DATA TAKE BACKSEAT
With the focus on the Yellen hearing, traders brushed off
Thursday's spate of domestic data that suggested a U.S. economy
in need of continued aggressive stimulus from the Fed.
The U.S. trade deficit grew to $41.78 billion in September,
compared with a revised $38.70 billion in August, while the
number of Americans filing jobless benefits for the first time
totaled 339,000 last week, more than the 330,000 forecast by
analysts, government data showed.
The Fed on Thursday bought $3.171 billion in Treasuries
maturing from November 2020 to August 2023 as part of its latest
While the central bank sticks to its bond-buying program to
support the economic recovery, the government has been selling
debt to finance its spending.
It is unclear how the 30-year bond sale will fare given the
uncertainty around the Yellen hearing.
In "when-issued" activity, traders expected the bond issue
due in November 2043 to sell at a yield of 3.779
percent. This would be higher than the 3.758 percent at the
30-year bond reopening held in October.
The Treasury Department said it sell $13 billion of reopened
10-year Treasury inflation indexed notes next
Thursday. That 10-year TIPS issue last traded at
a yield of 0.502 percent, down over 5 basis points on the day.
- Budget, Tax & Economy
- Senate Banking Committee