TREASURIES-Prices gain as economic data disappoints
* Yields fall as consumer confidence, retail sales
disappoint
* White House says no decision yet on next Fed chair
* Fed buys $3.70 bln in notes due 2019, 2020
By Karen Brettell
NEW YORK, Sept 13 (Reuters) - U.S. Treasuries prices gained
on Friday after weak economic data pointed to slower growth
before the Federal Reserve's highly anticipated meeting next
week, where it is expected to announce it will reduce it bond
purchases.
Yields hit session lows on Friday after data showed that
consumer sentiment fell to a five-month low in September as
mortgage rates rose and fears over conflict with Syria
increased.
Retail sales data earlier on Friday also disappointed.
The Commerce Department said that retail sales increased 0.2
percent last month as Americans bought automobiles, furniture
and electronics and appliances. However, they cut back on
clothing, building materials and sporting goods.
"We started getting some weak economic data," said Charles
Comiskey, head of Treasuries trading at the Bank of Nova Scotia (Other OTC: BKSHF - news)
in New York.
The White House said it had not yet made a decision on its
pick to lead the Federal Reserve after a Japanese newspaper
reported that Lawrence Summers would soon be named. Summers is
viewed as more hawkish than Fed Vice Chair Janet Yellen, who is
also seen as a leading contender for the job, and is more likely
to raise interest rates at a faster pace.
"The fact that the Summers story was discredited by the
White House brought people back in to buy the belly of the
curve," Comiskey said.
U.S. benchmark 10-year Treasury notes were last
up 5/32 in price to yield 2.89 percent, down from 2.91 percent
late on Thursday. They have fallen from a two-year high of 3.01
percent last Friday.
Thirty-year bonds rose 11/32 in price to yield
3.84 percent, down from 3.85 percent on Thursday.
The weakening data comes at an awkward time for the Fed,
which meets next Tuesday and Wednesday. The U.S. central bank
will release the statement from its two-day meeting on
Wednesday.
It is seen as unlikely to sway the Fed from tapering its $85
billion-a-month bond purchase program, however, with the focus
now on how much the Fed is likely to reduce purchases.
"The bigger event will be next week's FOMC meeting where
we're looking for the Fed to announce their tapering plans
somewhere in the area of $10 billion-a-month reduction," said
Sean Murphy, a Treasuries trader at Societe Generale (Paris: FR0000130809 - news) .
The Fed bought $3.70 billion in notes due 2019 and 2020 on
Friday as part of its ongoing purchase program.
Bonds have also gained a bid after the Treasury completed
the sale of $65 billion in new debt to strong demand, in part
because investors unlocked hedges placed ahead of Verizon (NYSE: VZ - news) 's
record-breaking $49 billion bond sale on Wednesday.