TREASURIES-U.S. Treasuries climb further on Yellen's remarks

* Auction of $24 billion in 10-year notes draws strong

demand

* Benchmark yields retreat from eight-week high

* Yellen: Fed has more work to do to help economy

* Fed purchases $1.39 billion TIPS for QE3 program

By Wanfeng Zhou

NEW YORK, Nov 13 (Reuters) - U.S. Treasury debt prices rose

on Wednesday after Janet Yellen, who is likely to become the

next Federal Reserve chief, reinforced the market's view that

the central bank will maintain accommodative monetary polices

for awhile longer.

In remarks prepared for delivery to the U.S. Senate Banking

Committee on Thursday, Yellen said the U.S. central bank has

"more work to do" to help an economy and a labor market that are

still underperforming.

Yellen, the Fed's vice chair, has been nominated by

President Barack Obama to succeed Chairman Ben Bernanke when his

term expires in January. Investors will closely monitor her

comments on Thursday for hints about future policy actions.

U.S. 10-year Treasury note yields dropped below 2.70 percent

after Yellen's comments, while 10-year Treasury futures edged

higher.

Benchmark yields had spiked higher after last Friday's jobs

data raised speculation that the Fed may scale back bond

purchases in December. But those expectations have eased and

most analysts still do not expect a move until sometime in 2014.

"We've been unwinding some of those trades," said Kim

Rupert, managing director of fixed-income analysis at Action

Economics in San Francisco.

"A little bit of a short squeeze added to the bullish

momentum, and I think a lot of this has been predicated on

beliefs that Yellen will kind of maintain a very dovish Fed."

On the open market, benchmark 10-year notes

climbed 20/32 in price, yielding 2.699 percent. On Tuesday,

benchmark yields had hit their highest since mid-September.

U.S. 10-year Treasury futures last traded at 126-21/32 in

price, up 24/32.

The 30-year bond jumped 20/32 in price with a

yield of 3.820 percent.

Fed officials who spoke publicly on Tuesday signaled that

the economy, while showing some improvement, still needs support

from the current level of stimulus.

The U.S. central bank has been buying $85 billion a month of

Treasuries and mortgage-backed securities in a third round of

so-called quantitative easing, aimed at lowering unemployment

and achieving the Fed's target of 2 percent inflation.

"Now (Other OTC: NWPN - news) people are over-thinking this latest employment report.

Are we close to tapering? I don't think so. Nothing

fundamentally has changed," said Bonnie Baha, head of global

developed credit group at DoubleLine Capital in Los Angeles.

Bernanke will speak about the central bank to teachers at an

event in Washington at 7 p.m. EST (Other OTC: ECPCY - news) (0000 GMT). At the same time,

Atlanta Fed President Dennis Lockhart will give brief remarks at

a local event.

Also on Wednesday, the Treasury sold $24 billion of 10-year

notes at a high yield of 2.75 percent, with a bid-to-cover ratio

of 2.70. Indirect bidders, a category that includes central

banks, bought 47.7 percent, the biggest share since June.

The sale followed Tuesday's solid $30 billion three-year

debt offering, which fetched the strongest bidding since March.

The U.S. Treasury will complete this week's refunding with a $24

billion sale of 30-year bonds on Thursday.

In the meantime, the Fed bought $1.39 billion in Treasury

Inflation-Protected Securities in the latest purchase for its

QE3 program.

Benchmark yields have stayed in a 30-basis-point band since

the Fed surprised investors two months ago by deciding not to

taper its QE3 purchase program. Analysts anticipate this narrow

trading will persist until there is more proof that the economy

is breaking out of its sluggish pace of growth.

Few investors changed their Treasuries positions in the

latest week, according to a survey from J.P. Morgan Securities

released on Wednesday.

Nineteen percent of the firm's Treasuries clients surveyed

in the week ended Nov. 12 said they held more longer-dated U.S.

government debt than their portfolio benchmarks, the same amount

as last week. On the other hand, 25 percent said they held fewer

longer-dated Treasuries than their benchmarks, up slightly from

23 percent the previous week.

In "when-issued" activity, traders expected the upcoming

10-year note issue to sell at a yield of 2.759

percent. This was higher than the 2.657 percent yield at the

10-year note auction in October.

This week's coupon debt auctions were expected to raise

$63.5 billion to repay investors for maturing federal debt they

hold and $6.5 billion for the government.