TREASURIES-Selling exhausted, Treasuries move higher

* Lower prices lure buyers

* Prior sell-off had driven yields to 6-month highs

* Fed purchases spur mid-session about-face

By Ellen Freilich

NEW YORK, Dec 13 (BestGrowthStock) – U.S. Treasuries rebounded
after an earlier sell-off on Monday sent yields to their
highest levels in six months, renewing investors’ appetite.

Monday’s early sell-off had extended last week’s losses in
prices of U.S. government debt after a tax deal between
President Barack Obama and Republican lawmakers sparked
concerns of a widening federal budget gap and a view that the
extended tax cuts would boost economic growth.

But a 10-year yield above 3.375 percent, which represented
a 62 retracement of the May to December move, drew buyers and
reversed the trend on Monday.

“The market was oversold,” said John Spinello, chief
fixed-income technical strategist at Jefferies & Co in New

The mid-session turnaround got a kick-start when the
Federal Reserve bought $7.790 billion in Treasuries maturing in
2016 and 2017. Those purchases boosted prices of maturities
near that part of the yield curve higher.

The buying soon spread across the curve, pulling prices of
all Treasuries into the plus column, though seven-year notes
outperformed other maturities.

The seven-year U.S. Treasury note (US7YT=RR: ) was up 13/32,
its yield easing to 2.65 percent from 2.69 percent on Friday.

Benchmark U.S. 10-year Treasury notes (US10YT=RR: ) rose
10/32, their yields falling to 3.29 percent from 3.33 percent
on Friday.

Reversals of sales that bond dealers set up to hedge
corporate bond deals they are underwriting this week may also
have helped to lift Treasury prices.

The market is also focused on the Federal Reserve’s meeting
on Tuesday at which the U.S. central bank is expected to
continue a policy of monetary accommodation to steer the
economy away from deflation and foster employment.
(Editing by Leslie Adler)

TREASURIES-Selling exhausted, Treasuries move higher