TREASURIES-US debt prices up after price cuts draw buyers

* Recent price-cuts draw buyers

* Consumer price data confirms Fed view inflation subdued

* Fed committed to plan to buy Treasures
(Updates comment, prices)

By Ellen Freilich

NEW YORK, Dec 15 (BestGrowthStock) – U.S. Treasuries prices rose on
Wednesday after recent price declines lured buyers.

Economic reports on inflation and manufacturing mainly met
the market’s expectations.

News on November consumer prices confirmed the Federal
Reserve’s view that inflation trends are subdued.

“The CPI was friendly for bonds,” said David Ader, senior
government bond strategist at CRT Capital Group in Stamford,
Connecticut, referring to the Consumer Price Index.

The Federal Reserve said U.S. production rose 0.4 percent
in November, slightly exceeding forecasts. But utility output
was strong and manufacturing was up 0.3 percent. Figures showed
ample capacity remained in production facilities. For details,
see [ID:nN15122981] and [ID:nN15128935]

The benchmark 10-year note (US10YT=RR: ) rose 20/32, its
yield falling to 3.43 percent from 3.49 percent Tuesday.

“We’re at (price and yield) levels not seen since May and
the magnitude of the moves extended the momentum well into
oversold levels,” Ader said.

A 0.1 percent rise in the November U.S. consumer price
index was even more muted than the prior month’s reading, while
a 0.1 percent rise in the CPI, excluding food and energy items,
was the first rise after being flat for three straight months.

“The headline reading is below consensus and it’s way below
the Fed’s comfort zone,” said John Canally, investment
strategist at LPL Financial in Boston.

The New York Federal Reserve Bank said its Empire State
manufacturing activity index rose to 10.57 in December from a
particularly weak reading of -11.14 in November, offering some
evidence of a turnaround. [ID:nN15125680]

“Empire State bounced up quite well and we saw a dip in
inventories versus a rise in new orders as boding well for
restocking,” Ader said.

Analysts said Tuesday’s selloff left prices at levels
attractive enough to entice buyers.

Traders said Treasuries got some safe-haven support after
Moody’s said it might downgrade Spain’s debt rating. drawing
new attention to contagion risks from the eurozone crisis.

The Fed’s continued commitment to buy more U.S. Treasuries
over the course of six months, reiterated in Tuesday’s Fed
statement, also lent support to bond prices.

The Fed said there would be no change in its $600 billion
bond-buying program intended to steer the economy away from
deflation and cut unemployment, adding that the overnight
federal funds rate would be kept near zero.

Seven-year U.S. Treasury notes (US7YT=RR: ) rose 17/32 in
price, its yield falling to 2.76 percent from 2.85 percent on
Tuesday. Five-year notes (US5YT=RR: ) rose 12/32 in price, their
yields falling to 2 percent from 2.09 percent on Tuesday.

Though Treasuries drew buyers, traders said one constraint
on how high prices could go was the market’s current view that
a more stimulative fiscal outlook, combined with monetary
accommodation, will favor riskier assets like stocks and
commodities over safe-haven assets like U.S. government debt.

The 30-year U.S. Treasury bond (US30YT=RR: ) rose 11/32, its
yield easing to 4.51 percent from 4.53 percent Tuesday.
(Editing by Jeffrey Benkoe)

TREASURIES-US debt prices up after price cuts draw buyers