TREASURIES-Prices gain, recovering from Friday’s selloff

* Little market reaction to rise in July personal spending

* Investors looking ahead to non-farm payrolls on Friday
(Updates prices)

By Chris Reese

NEW YORK, Aug 30 (BestGrowthStock) – U.S. Treasury debt prices rose
on Monday as traders clawed back some of Friday’s sharp losses,
when Federal Reserve Chairman Ben Bernanke signaled the U.S.
central bank was not on the verge of a new round of bond
buying.

Treasuries on Monday were “looking to find some solid
ground after one of the worst days on Friday in recent memory,”
said George Goncalves, head of U.S. interest rates strategy at
Nomura Securities International in New York.

Friday’s bond sell-off was the biggest in three months as
traders took profits following Bernanke’s speech, which
disappointed investors who had positioned for a new round of
quantitative easing from the central bank. [ID:nLDE67T02D]

Benchmark 10-year notes (US10YT=RR: ) were trading 27/32
higher in price to yield 2.55 percent, down from 2.65 percent
late on Friday, while 30-year notes (US30YT=RR: ) were 1-16/32
higher to yield 3.62 percent, from 3.70 percent on Friday.

Two-year notes (US2YT=RR: ) gained 3/32 to yield 0.50
percent, from 0.56 percent.

The price action flattened the Treasury yield curve, with
the spread between the yield on two-year notes and 10-year
notes narrowing to 205 basis points from 209 basis points late
on Friday.

Prior to Bernanke’s speech on Friday, the market had been
gearing up for more quantitative easing from the Fed, beyond
the cental bank’s announcement earlier this month that it would
buy Treasuries with funds from maturing mortgage holdings.

“I think we were up way too much on expectations the Fed
was going to do something, provide more quantitative easing,
and then the drop down (on Friday) was also kind of
exaggerated,” said Kim Rupert, managing director of global
fixed income analysis at Action Economics LLC in San
Francisco.

As part of bond-buying program, the Fed on Monday bought
$360 million of Treasury inflation-protected securities
maturing January 2017 through April 2029. The central bank has
bought $9.285 billion of securities since announcing the
program Aug. 10.

Prices had little reaction to data on Monday showing U.S.
personal spending rose by 0.4 percent in July, the strongest
pace in four months and above expectations for a 0.3 percent
rise. Personal spending had been flat in June. For details see
[ID:nN30169545].

Traders are looking ahead to August non-farm payrolls data
to be released on Friday for further market direction. The
median of forecasts from analysts polled by Reuters is for a
loss of 100,000 jobs in August, after payrolls contracted by
131,000 in July.

“I think we’re in a range trade right now until we see
Friday’s data,” Rupert said.
(Additional reporting by Burton Frierson; Editing by Leslie
Adler)

TREASURIES-Prices gain, recovering from Friday’s selloff