October 10, 2017 / 1:35 PM / a year ago

TREASURIES-Prices gain on Catalonia concerns; investors await data, supply

    * Investors eye possible Catalonia independence declaration
    * U.S. inflation data later this week in focus
    * Treasury to sell $56 billion in supply this week

    By Karen Brettell
    NEW YORK, Oct 10 (Reuters) - U.S. Treasury prices gained on
Tuesday as investors were cautious ahead of a possible move by
Catalonia to unilaterally declare independence from Spain as
well as a heavy week of domestic economic data and bond and note
    Catalonia's secessionist leader Carles Puigdemont is due to
address the region's parliament in Barcelona around 1600 GMT (12
p.m. EDT) and could ask the assembly to vote on a unilateral
declaration of independence from Madrid.             
    The Spanish region's efforts to secede have stoked concerns
about an increase in populist movements in the euro zone that
threaten to damage the bloc’s economic strength and single
    If Catalonia splits from Spain "that is going to create
economic disruption, and that's bad for the Spanish economy and
the euro zone as a whole," said Mary Ann Hurley, vice president
in fixed income trading at D.A. Davidson in Seattle.
    Investors were also cautious after RIA news agency on Friday
quoted a Russian lawmaker as saying that North Korea is
preparing to test a long-range missile which it believes can
reach the west coast of the United States.             
    Benchmark 10-year Treasury notes            were last up
3/32 in price to yield 2.357 percent, down from 2.372 percent on
Friday. The bond market was closed on Monday for the Columbus
Day holiday.
    The 10-year Treasury yields had 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 that inflation is increasing.
    Producer price data on Thursday and consumer price data on
Friday will both be scrutinized for confirmation of higher
    "The data is really very hard to read right now because its
hurricane-impacted," Hurley said.
    Some analysts have said that September's rise in wages may
be because the adverse weather impeded lower-income workers from
getting to work more than it did higher-income workers.
    Retail sales data for September released on Friday will also
be watched for signs of the strength of the U.S. economy.
    The U.S. Federal Reserve will release minutes from its
September policy meeting on Wednesday.
    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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