TREASURIES-Prices rise marginally on worries over rate of growth

Wed Jan 23, 2013 4:49pm GMT

* Benchmark yields remain in 1.8 to 1.9 percent range
    * Fed buys $1.474 billion of longer-dated debt
    * U.S. expected to raise debt ceiling but uncertainties
remain

    By Chris Reese
    NEW YORK, Jan 23 (Reuters) - U.S. Treasury debt prices rose
marginally on Wednesday with support from safe-haven buying on
worries over the pace of global growth and uncertainty given the
United States is on track for divisive negotiations on spending
cuts and the budget deficit.
    Treasuries were also lent support as the Federal Reserve
bought $1.474 billion of longer-dated U.S. government debt as
part of the central bank's latest economic stimulus program.
    Investors did some cautious buying in Treasuries on
Wednesday after the S&P 500 and the Dow Jones industrial
average reached five-year closing highs on Tuesday, with
gains in equities stoked by a strong start to the corporate
earnings season.
    Benchmark 10-year notes were trading 7/32 higher
in price to yield 1.82 percent, down from 1.84 percent late
Tuesday. Yields have been relatively range-bound, holding
between 1.80 and 1.90 percent for over a week.
    "Japan, Europe and the U.S. are struggling to find something
more than 'surface growth,' and that is leading investors to
hedge their hopes by taking some risk off the table in the form
of U.S. Treasuries," said Kevin Giddis, managing director of
fixed income at Morgan Keegan in Memphis, Tennessee.
    A proposed U.S. debt-limit extension is expected to be
approved on Wednesday, although the prospect of nearly four more
months of uncertainty balanced out short-term relief at the
measure. 
    The extension of the debt limit to May 19 would prevent the
United States defaulting on its debts in the short term, but was
seen as prolonging the sense of uncertainty in markets.
    That uncertainty could filter through into economic data
over coming months, supporting U.S. debt prices near current
levels, as businesses put off investment decisions and consumers
feel the hangover from the expiration of tax breaks.
    Growth concerns were fueled on Wednesday after the
International Monetary Fund trimmed its 2013 forecast for global
growth to 3.5 percent from the 3.6 percent it projected in
October, citing an unexpectedly stubborn euro zone recession and
weakness in Japan. 
    The IMF did however say growth was expected to rebound in
2014 to 4.1 percent if a recovery takes a firm hold in the euro
zone.
    The Fed was a big buyer of Treasuries on Wednesday,
purchasing $1.474 billion of U.S. government debt maturing
February 2036 through May 2042.
    Following the purchase, 30-year Treasury bonds 
were trading 8/32 higher in price with their yield little
changed from late Tuesday at 3.01 percent.
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