TREASURIES-Bonds gain for a third session ahead of QE2

* Treasuries gain for a third consecutive session

* Sept consumer spending rises by less than expected

* Fed asset purchase program looms

By Chris Reese

NEW YORK, Nov 1 (BestGrowthStock) – U.S. Treasuries rose for a
third straight session on Monday as investors again took
advantage of a recent rise in yields and continued talk about
the size of an expected Federal Reserve purchase program later
this week.

Treasuries briefly extended gains, with the 30-year bond
rising over a point in price after data showed a smaller than
expected rise in consumer spending in September and a dip in
income for the first time in 14 months, which bolstered the
safe-haven appeal of U.S. government debt. For details see
[ID:nN01234661].

“We have seen a little bullish bias in Treasuries and the
data do support that,” said Kim Rupert, managing director of
global fixed income analysis at Action Economics in San
Francisco.

Rupert added investors have been buying in recent sessions
after selling early last week pushed yields up to levels that
brought in bids.

“We saw some demand come in when the 10-year yield poked
above 2.60 (percent) and the bond pressed against 4.00
percent,” she said.

After briefly reaching over a point higher in price
following the early data, the 30-year bond (US30YT=RR: ) settled
back to trade 23/32 higher in price on Monday to yield 3.95
percent, down from 3.99 percent late on Friday. Benchmark
10-year notes (US10YT=RR: ) were trading 10/32 higher in price to
yield 2.57 percent, down from 2.61 percent.

Of course, the backdrop to Treasuries trade early this week
continued to be speculation over the size of a Fed asset
purchase program expected to be announced at the close of the
U.S. central bank’s policy committee meeting on Wednesday
afternoon.

Expectations for the total size of the quantitative easing
program have widely ranged from $250 billion to $2 trillion.

George Goncalves, head of U.S. rates strategy at Nomura
Securities in New York, said his firm went short on Treasuries
a few weeks ago after 10-year yields failed to dip below the
2.30 percent level.

“Positive technicals also have been broken favoring a
longer-term bearish tilt — but given all of the uncertainty
about how things may transpire, we would not add to shorts
until we get the QE2 reaction out of the way,” Goncalves said.
(Reporting by Chris Reese; Editing by Theodore d’Afflisio)

TREASURIES-Bonds gain for a third session ahead of QE2