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TREASURIES-Bonds firm as volumes dwindle before holiday weekend
December 23, 2016 / 5:41 PM / 9 months ago

TREASURIES-Bonds firm as volumes dwindle before holiday weekend

(Adds data, updates prices)
    * Bond market closes early on Friday, closed on Monday
    * Consumer sentiment holds near 13-year high
    * Treasury to sell $88 billion supply next week

    By Karen Brettell
    NEW YORK, Dec 23 (Reuters) - U.S. Treasury prices were
firmer on Friday in thin volumes as investors prepared for the
three-day Christmas holiday weekend.
    "We're a little stronger, the curve is a little flatter, but
volume has been anemic," said Justin Lederer, an interest rate
strategist at Cantor Fitzgerald in New York.
    Bonds showed little reaction to data showing that consumer
sentiment held near a 13-year high this month as Americans
anticipated a stronger economy would create more jobs.
 
    New U.S. single-family home sales rose more than expected in
November, reaching their highest level in four months.
    Benchmark 10-year notes gained 4/32 in price to
yield 2.54 percent, down from 2.55 percent late on Thursday.
    The bond market will have an early close at 2 p.m. EST (1900
GMT) on Friday and is closed on Monday for the Christmas
holiday.
    The Treasury Department will sell $88 billion in new
coupon-bearing supply next week: $26 billion in two-year notes
on Tuesday, $34 billion in five-year notes on Wednesday and $28
billion in seven-year notes on Thursday.
    The sales may need a discount to attract demand as many
traders will be away on vacation and some European markets will
still be closed on Tuesday.
    "December auctions are always a little hard to gauge, just
given the time of year," Lederer said.
    That said, he added, "after the big selloff after the
election, we have found some buyers and have found some levels,
and I'd be very surprised to see a significant backup." 
    Yields have soared since Donald Trump's victory in the U.S.
presidential election last month as investors bet he will
implement new fiscal stimulus that would boost growth and
inflation.
    Some investors have also been wary of buying bonds as they
evaluate how many times the Federal Reserve is likely to raise
interest rates.
    The Fed was more hawkish than expected at its December
meeting last week, indicating it may raise rates three times
next year.
    That helped to send 10-year note yields to a more than
two-year peak and two-year note yields to their highest levels
since 2009.

 (Editing by Bernadette Baum and Lisa Von Ahn)

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