TREASURIES-U.S. bond prices dip, still in recent range

Written By Unknown on Jumat, 12 Oktober 2012 | 18.12

LONDON | Fri Oct 12, 2012 6:24am EDT

LONDON Oct 12 (Reuters) - U.S. government bonds fell slightly on Friday, but remained locked in a narrow range due to concerns about the euro zone's ability to tackle its debt crisis and over the health of the U.S. economy.

* Concerns over third-quarter corporate earnings and how U.S. lawmakers are going to deal with the expiry of tax breaks and automatic spending cuts at the end of the year - the so-called fiscal cliff - are also keeping investors on tenterhooks.

* Markets are waiting for clues as to when Spain will request a bailout. Such a move is seen as virtually inevitable and would probably increase investors' appetite for assets riskier than safe-haven U.S. Treasuries as it would activate the European Central Bank's unlimited bond-buying programme. But some market players believe the euro zone crisis may have to escalate further before Spain makes a request.

* Benchmark U.S. 10-year T-note yields were last 1.7 basis points higher on the day at 1.6855 percent, while T-note futures were 5/64 lower at 133-06/32. Ten-year yields have been stuck in a roughly 1.5-1.9 percent range for more than two months.

* "The market is just moving sideways," said Rabobank strategist Philip Marey. "It is looking for direction, but there is no definitive news in the euro zone ... and while we've had some good data recently the overall view is that the U.S. economy is slowing down."

* On Thursday, data showed the number of Americans filing new claims for unemployment benefits fell to the lowest level in more than four and a half years.


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