October 11, 2017 / 1:32 PM / a year ago

TREASURIES-Prices firmer before Federal Reserve minutes, supply

    * Minutes from Fed's September meeting in focus
    * Treasury to sell three-year, 10-year supply

    By Karen Brettell
    NEW YORK, Oct 11 (Reuters) - U.S. Treasury prices were
slightly higher on Wednesday ahead of the scheduled release of
minutes from the Federal Reserve's September policy meeting and
the Treasury Department's auctions of three-year and 10-year
    The U.S. central bank's policy statement last month was seen
as hawkish, boosting expectations it would raise interest rates
in December. That view gained further credence in the wake of
strong U.S. economic data and Fed officials' comments.
    "Speakers have been out in force recently and I think
they've been pretty clear that a December rate hike is certainly
on the table," said Thomas Simons, a money market economist at
Jefferies in New York.
    Investors will be watching to see if the minutes show Fed
officials expressing concerns about low inflation, though any
comments may appear dated as inflation expectations have also
risen since their meeting.
    "There is a little bit more optimism on the inflation
outlook now than there was three weeks ago, so if there is
trepidation in the minutes its kind of questionable exactly how
much value that has," Simons said.
    Benchmark 10-year notes             were last up 2/32 in
price to yield 2.339 percent, down from 2.345 percent on
    The 10-year yields jumped to 2.402 percent on Friday, the
highest level since May 11, after the government’s employment
report for September showed a rise in wages that boosted
expectations inflation is increasing.
    Producer price data on Thursday and consumer price data on
Friday will both be scrutinized for confirmation of higher
prices, though many analysts have said that Friday's data was
likely to be influenced by recent hurricanes.
    The Treasury will sell $56 billion in new coupon-bearing
supply this week, including $24 billion in three-year notes and
$20 billion in 10-year notes on Wednesday, and $12 billion in
30-year bonds on Thursday.

 (Editing by Paul Simao)
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