* Prices rise, 10-year yields hold at 2 percent
* Focus remains on likelihood of Fed tapering purchases
* Market will close early for Memorial Day holiday weekend
* Treasury to sell $99 billion in 2, 5 and 7-year notes next
By Karen Brettell
NEW YORK, May 24 (Reuters) - U.S. Treasuries prices edged up
on Friday after briefly turning negative on strong manufacturing
data, as traders evaluated the likelihood of the U.S. Federal
Reserve pulling back on bond purchases this year.
Benchmark 10-year Treasuries yields have held above 2
percent since Fed Chairman Ben Bernanke said on Wednesday that
the U.S. central bank may decide to pull back on its bond
purchases in the coming few meetings if data show the economy is
Investors are now grappling with whether or not the dramatic
yield increase this month is exaggerated relative to the pace of
economic improvement, or whether yields are likely to continue
to climb on stronger growth and a more hawkish turn by the Fed.
"Now the market has heard Bernanke and seen the minutes and
we're seeing some better data, the market is going to start to
decide where they think the Fed is going sooner than later,"
said Jason Rogan, managing director of Treasuries trading at
Guggenheim Partners in New York.
"Right now the market has interpreted that Bernanke's
comments, although maybe taken a little bit out of context, give
the impression that the Fed is willing to at least announce
tapering over the next couple of meetings and that by itself
might be enough to push us to a little bit higher yields," he
Ten-year notes were last up 5/32 in price to
yield just above 2 percent, after briefly rising to 2.03 percent
on data that showed that orders for long-lasting U.S.
manufactured goods rose more than expected in April.
The notes yields have increased from as low as 1.88 percent
on Wednesday, before Bernanke's comments, and have surged from
1.61 percent at the beginning of May on higher hopes for the
Rogan sees the notes as likely having some support at around
The next major data release will be this month's jobs
report, which is due to be released in two weeks.
The Treasury will sell $99 billion in new coupon-bearing
debt next week, including $35 billion in two-year notes on
Tuesday, $35 billion in five year notes on Wednesday and $29
billion seven-year notes on Thursday.
The U.S. bond market will close at 2 p.m. EDT on Friday and
is closed on Monday for the Memorial Day holiday.