* Benchmark yield eases back from more than six-week high
* German investor morale falls short of expectations
* Fed buys $3.31 bln in longer-dated Treasuries
By Luciana Lopez
NEW YORK, May 14 (Reuters) - Prices for U.S. Treasuries
traded nearly flat on Tuesday after falling for almost a week,
as investors paused to reconsider recent growing expectations
that the U.S. Federal Reserve might taper its massive easing
program in coming months.
Treasuries have sold off recently as jobs data hinted at
gathering strength in the labor market, sparking speculation the
Fed could soon slow its $85 billion per month in purchases of
Treasuries and mortgage-backed securities.
A report over the weekend in The Wall Street Journal fueled
views that the Fed could be preparing to hit the brakes.
But with inflation still well below the Fed's 2 percent
target and the economy sluggish, analysts said on Tuesday that
monetary policymakers have little incentive to slow down yet.
"We have inflation going to 1 percent by this summer," said
With the Fed on track to miss its 2 percent target, as
measured by the PCE, the Fed's preferred personal
consumption expenditures price index, by a full percentage
point, "We're supposed to be starting to think of them slowing
the pace of accommodation? It just doesn't make sense," Briggs
Analysts forecast U.S. growth could remain lackluster for
perhaps years. Mohamed El-Erian, chief executive of bond manager
Pimco, said Pimco sees growth in the 2 percent area for the next
three to five years.
Prices for 10-year notes rose 1/32 to yield
1.914 percent, from 1.9086 percent late on Monday.
Prices for 30-year bonds gained 3/32 to yield
3.123 percent, from 3.1183 percent late on Monday.
More inflation figures are slated for later in the week, as
well, and those could underscore the tepid price pressures in
With data showing U.S. import prices fell in April, "We
expect that the decline in oil and gasoline prices will lead to
declines in the headline PPI data tomorrow, in the headline CPI
on Thursday," said Thomas Simons, money market economist at
Jefferies & Co in New York.
As part of its asset purchases, the Fed on Tuesday bought
$3.31 billion in Treasuries maturing between May 2020 and
Investors are still worried about the pace of global growth,
with the euro zone sovereign debt crisis ongoing. In the latest
evidence of those simmering concerns, investor confidence in
Germany was well short of expectations, despite rising slightly.
German analyst and investor sentiment edged up in May, the
ZEW think tank said on Tuesday. Its monthly poll of economic
sentiment rose to 36.4 points from 36.3 in April, though it fell
below the consensus forecast in a Reuters poll of 30 economists
for a reading of 38.3.