April 30, 2019 / 6:15 PM / in 3 months

TREASURIES-Weak Chicago data, month-end demand boosts bond prices

 (Recasts with U.S. data, new throughout)
    * Chicago PMI index disappoints
    * Month-end demand adds to bid for Treasuries
    * Fed meeting on Wednesday in focus

    By Karen Brettell
    NEW YORK, April 30 (Reuters) - U.S. Treasury prices gained
on Tuesday after weak regional manufacturing data raised some
concerns about the economy and as month-end repositioning
boosted demand for the debt.
    A Chicago manufacturing index was the lowest in more than
two years and came in far below expectations.
    "The Chicago purchasing managers survey really disappointed,
and that's what really put the bid into the market," said Mary
Ann Hurley, vice president in fixed income trading at D.A.
Davidson in Seattle.
    It followed weak data overnight in China that sent bond
prices higher.                           
    Better-than-expected euro zone economic growth temporarily
erased this strength.             
    Investors rebalancing their books for month end and before
Wednesday's Federal Reserve meeting added to strength.
    "You have month-end position squaring going on, and I think
people are also squaring their books as they're getting ready
for the Fed" on Wednesday, Hurley said.
    Fed Chairman Jerome Powell will give a news conference on
Wednesday. Traders will be looking for indications on how the
U.S. central bank views market pricing of further rate moves.
    Interest rate futures traders are currently pricing in a 66
percent chance of an interest rate cut by December, according to
the CME Group's FedWatch Tool.
    Investors also are focused on whether the U.S. central bank
cuts the interest it pays on excess reserves (IOER) in a bid to
prevent the federal funds rate from drifting higher, as some
analysts expect.             
    The Treasury Department will announce its refunding plans
for the coming quarter on Wednesday. It said on Monday it plans
to borrow much less in the second quarter than it previously
expected. Treasury said it will borrow $30 billion during the
April-June period, less than half its previous estimate.
    Jobs data for April released on Friday will be closely
watched for further indications of wage pressures and the
strength of the labor market.

 (Reporting by Karen Brettell; Editing by Will Dunham)
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