TREASURIES-Bonds rise as bargain-hunters emerge

* Chinese data, Basel deal exert early selling pressure

* Long-dated yields still hover at highest in a month

* Two-year note yield touches highest since late July

* U.S. Fed scheduled to buy debt due in 5 to 10 years
(Updates market action, adds fresh quotes)

By Richard Leong

NEW YORK, Sept 13 (BestGrowthStock) – U.S. Treasuries rose on
Monday, as bargain-hunters emerged following last week’s steep
decline caused by less pessimism over the economy and a poor
30-year bond auction.

The modest buying helped wiped out earlier losses tied to
upbeat economic data from China that spurred investor appetite
for stocks and reduced demand for safe-haven bonds.

Also encouraging global stock markets was a global deal
allowing banks more time to raise additional capital to cushion
against another credit crisis, analysts said.

“There are some value investors who are taking a stab in
the back end of the bond market,” said John Brady, senior vice
president at MF Global in Chicago.

Another major bond buyer was the Federal Reserve which has
targeting government debt maturing in five to 10 years in a
purchase operation on Monday. The U.S. central bank reinstated
this quantitative easing tool in August in an effort to hold
long-term borrowing costs to stimulate the economy.

Benchmark 10-year notes (US10YT=RR: ) were up 1/32 in price
for a yield of 2.792 percent, flat from 2.795 percent late
Friday. The 10-year yield had touched technical support 2.85
percent, which was also its highest in a month.

The 30-year bond (US30YT=RR: ) was the only maturity still in
the negative zone. It was down 12/32, with a yield of 3.89
percent, up from 3.87 percent Friday.

Earlier, long-dated Treasury prices were on track to fall
for seven out of the past eight sessions, as they have been
deemed overvalued due to intense buying on fears of deflation
and a double-dip recession.

Short-dated government issues edged higher, as traders
bought them in order to close out curve trades last week.
Two-year notes (US2YT=RR: ) were flat in price to yield 0.56
percent after nearing 0.60 percent in overseas trading, which
was its highest intraday yield since late July.


Official reports showed Chinese factories ramped up output
in August and a key measure of money growth easily beat
expectations. Together with less grim U.S. data last week, the
data assuaged fears of worldwide economic slowdown. For more,
see [ID:nTOE68A00H]

Still, investors remain cautious about the economy as they
made room for last week’s government and company bond supply.

“The economy is not strong enough. It has not bottomed
out,” Joe Larizza, director of governments/agencies trading at
Vining Sparks in Memphis, Tennessee.

Corporate bond issuance totaled $34.4 billion for the week,
the most since May 2008, according to IFR, a Thomson Reuters
service. [ID:nN10514333]

“As soon as we get this technical sell-off out of the way
from all this corporate supply, the market will be on surer
footing,” said Tom di Galoma, head of interest rates trading at
Guggenheim Partners in New York.

In the market pullback, speculative traders scaled back
bullish bets on long-dated Treasuries last week, according to
Commodity Futures Trading Commission data released on Friday.

For a graphic on net short 10-year Treasury positions, see:

In the meantime, money managers pared their average
Treasury and agency allocations to 31 percent in the week ended
Sept. 10 versus 38 percent in the previous week, research firm
Ried Thunberg ICAP said.
(Reporting by Richard Leong, Editing by Chizu Nomiyama)

TREASURIES-Bonds rise as bargain-hunters emerge