TREASURIES-Bonds up on Fed buys; unease on Ireland, Portugal

* Bonds rise ahead of Fed purchases

* Treasuries get bid from Ireland bailout disappointment

By Karen Brettell
(Updates market action, adds new quotes)

NEW YORK, Nov 29 (BestGrowthStock) – U.S. Treasuries prices rose on
Monday as dealers and investors prepared for new Federal
Reserve bond purchases while persistent unease over Irish and
Portuguese credits also boosted demand for safe-haven debt.

Benchmark 10-year Treasury notes (US10YT=RR: ) rose 15/32 in
price to yield 2.82 percent.

The 30-year bond (US30YT=RR: ) increased 24/32 in price to
yield 4.16 percent.

“I think the strength we’re seeing is dealers positioning
for (Fed) buybacks that we expect this week: Two buyback
operations today and then buybacks for the balance of the
week,” said Richard Bryant, head of Treasury trading at MF
Global Securities in New York.

The Federal Reserve will purchase $39 billion this week.
Purchases on Monday will include $1.5 billion-to-$2.5 billion
in longer-term debt maturing between 2021 and 2027 and $6
billion-to-$8 billion in notes maturing in 2013 and 2014.

Also, “it seems like there’s still pretty good potential
for big market moving headlines out of Europe and Asia, all of
which could be pretty bond friendly,” Bryant added.

The EU on Sunday approved an 85 billion euro ($115 billion)
rescue package for debt-stricken Ireland, the second euro
country after Greece to receive emergency aid. For details, see
[ID:nLDE6AR0M6]

“The total ‘risk on’ trade is still not back, even though
there was this announcement,” said Ira Jersey, interest rate
strategist at Credit Suisse in New York.

“I think part of it was that the Irish, Spanish and
Portuguese market didn’t react the way some people thought they
would, with spreads going wider,” he said. “That kept a little
bit of a bid in Treasuries.”

Credit default swaps protecting Ireland’s debt rose by
around 9 basis points in cost on Monday to 612 basis points, or
$612,000 per year to insure $10 million in debt for five years,
according to Markit Intraday.

Portugal’s CDS costs also rose by around 36 basis points to
537 basis points and Spain’s CDS costs increased by around 29
basis points to 351 basis points, Markit data show. Rising CDS
costs is a negative sign, and indicates perceptions of
worsening credit quality.

U.S. stock index futures also fell on Monday as worries
lingered about Europe’s ability to contain government fiscal
problems from spreading. [ID:nN29193518]

Treasuries are likely to continue to get a strong bid early
this week, supported by the Federal Reserve purchases, and the
potential for further headlines from Europe and Asia, said MF
Global’s Bryant.

As investors turn their focus on economic data scheduled
for release later in the week, however, bond strength could
wane.

“As people start to look ahead to Friday’s employment
report, which could potentially be better than the market
expects, you could see the market give back some of the gains,”
he said.
( Editing by W Simon )

TREASURIES-Bonds up on Fed buys; unease on Ireland, Portugal