* Monday's U.S. economic data weak overall
* Rate futures still pricing in 70 pct chance of June hike
(Recasts, updates prices, adds comment, byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 1 U.S. Treasury debt prices edged
lower on Monday in choppy trading, with investors consolidating
positions ahead of a slew of events and data this week, led by
the Federal Open Market Committee meeting and April's non-farm
Yields, which move inversely to prices, have come off their
highs following a round of soft U.S. economic data that
confirmed weak first-quarter growth.
U.S. Treasury prices rose on Friday, supported by
institutional investor buying to meet routine month-end
"To a certain extent, we are unwinding Friday's month-end
gains," said Tom Simons, money market economist at Jefferies in
"It's kind of hard to rally a whole lot here even though
data is not particularly encouraging. After the performance last
week, there's a cool-down period and some consolidation in front
of data such as payrolls," he added.
Reports on Monday showed that U.S. factory activity slowed
in April, while consumer spending was unchanged in March and an
important inflation measure recorded its first monthly drop
The weak reports came before the Federal Reserve's two-day
policy meeting, which starts on Tuesday, with the U.S. central
bank widely expected to hold interest rates steady. Investors
are instead focused on the language of the Fed statement for
guidance on the number of interest rates hikes this year and
Commenting on the drop in the U.S. manufacturing index to
54.8, compared with the consensus forecast of 56.5, Michael
Pearce, U.S. economist at Capital Economics in New York, said
the data should not prevent the Fed from raising rates again in
Interest rate futures are still pricing a 70 percent chance
the Fed will tighten rates in June even after Monday's poor U.S.
economic data, according to the CME's FedWatch.
"The big picture remains that, with a rapid appreciation of
the dollar and large drop in oil prices now well behind us, the
manufacturing sector is likely to provide a small boost to
growth this year and next," Pearce added.
In late morning trading, benchmark 10-year U.S. Treasury
notes were down 2/32 in price to yield 2.289
percent, up from Friday's 2.282 percent.
U.S. 30-year bond prices fell 9/32, yielding
2.967 percent, up from 2.952 percent late on Friday.
On the front end of the curve, two-year yields were at 1.273
percent, slightly up from Friday's 1.27 percent.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu
Nomiyama and Dan Grebler)