TREASURIES-Bonds fall on less grim data before 30-year sale

* Less dismal data on jobs, trade pare safety bids

* U.S. Treasury to reopen 30-year bond with $13 billion

* Fed buys $1.35 billion in debt due in 2 to 3 years
(Updates market action, adds quote)

By Richard Leong

NEW YORK, Sept 9 (BestGrowthStock) – U.S. Treasury prices fell on
Thursday after less dismal data on trade and labor conditions
revived investors’ risk appetite and reduced safe-haven demand
for bonds.

The 30-year bond led the market sell-off for a second day,
as Wall Street rose and credit spreads tightened.

“Today is a ‘risk on’ day. People are buying anything with
risk in it,” said Jeff Given, portfolio manager with MFC Global
Investment Management in Boston.

Thursday’s less gloomy readings on jobless claims and trade
deficits came almost a week after a better-than-expected U.S.
payrolls report. For more see [ID:nLDE6881C9].

While U.S. economic growth has slowed since it returned a
year ago, the latest data have dialed back anxiety over the
chances of a double-dip recession.

“It does seem that the soft patch that we had on the
economy is finding a bit of a base; I think that is
encouraging,” said David Sloan, economist at 4Cast Ltd in New
York.

The government reported initial claims for jobless benefits
fell to 451,000 in the week ended Sept. 4, a two-month low,
while the country’s trade deficit totaled $42.8 billion in
July, much smaller than June’s $47.3 billion. [ID:nOAT004702]
and [ID:nCLA9KE648]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a graphic on weekly U.S. jobless claims: http://graphics.thomsonreuters.com/F/09/US_JCB0910.gif For a graphic on the U.S. trade balance: http://link.reuters.com/had52p ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

These higher bond yields could entice bargain-minded
investors who have shied away after long-dated yields hit
1-1/2-year lows about two weeks ago.

“With this market set-up, this 30-year auction should go
pretty well,” MFC’s Given said.

On the supply front, the U.S. Treasury will reopen the
30-year bond it originally sold in August by $13 billion, which
is part this week’s $67 billion in coupon-bearing supply.

Investors have bid heavily for U.S. government debt in the
face of slowing economic growth and renewed worries over the
health of European banks.

Treasuries offer some income plus a near guarantee on
principal in this precarious environment, analysts said.
[ID:nN08123684]

In the “when-issued” market, traders expected the reopened
30-year debt to sell at a 3.805 percent yield (US30YTWI=TWEB: ).
This was lower than the clearing yield of 3.954 percent when
the issue was auctioned in August.

Prior to the week’s final debt sale, the Federal Reserve
bought $1.35 billion in debt that will mature in two to three
years. It has purchased $14.3 billion in bonds since it
reinstated this quantitative easing tool in a bid to avert
deflation and a double-dip recession. [ID:nN20EDTABL]

The benchmark 10-year note (US10YT=RR: ) was down 20/32 in
price for a yield of 2.72 percent, up from 2.65 percent in New
York trading late Wednesday.

The 30-year bond (US30YT=RR: ) was down 1-10/32 in price with
its yield at 3.80 percent, up from 3.74 percent late
Wednesday.

The market sell-off also steepened the yield curve, as
traders anticipate higher growth and inflation. The
two-to-30-year part of the curve last traded at 3.25 percentage
points from 3.20 points late Wednesday.
(Additional reporting by Chris Reese; Editing by James
Dalgleish)

TREASURIES-Bonds fall on less grim data before 30-year sale