The Fed will conduct a buyback later in the session By Deborah Levine, MarketWatch NEW YORK (MarketWatch) — Treasury prices pared their losses Monday after a report showed a sharp deterioration of business conditions in the New York area this month. Bonds were down before the data amid reports of more political pushback against the Federal Reserve’s just-started quantitative-easing program. Yields on 10-year notes (UST10Y 2.86, +0.08, +2.80%) , which move inversely to prices, rose 8 basis points to 2.87%. A basis point is 0.01%. Yields on 2-year notes (UST2YR 0.53, +0.02, +3.94%) rose 2 basis points to 0.54%. The New York Fed’s Empire State manufacturing survey dropped 27 points to negative 11.1, far worse than economists predicted. Read about Empire survey. A separate report showed U.S. retail sales rose 1.2% in October, more than expected thanks to vehicle sales. Excluding autos, sales rose 0.4%, close to what analysts estimated. See story on retail sales. Still to come is the Federal Reserve’s first buyback of Treasurys this week. The Fed said it will buy $7 billion to $9 billion in debt maturing between 2016 and 2017. It’s expected to end the operation after 11 a.m. Eastern time. “The Fed’s been under nothing but fire for zero rates and its talk of QE, which really got under way in August,” said bond strategists at CRT Capital Group. “They’ve only started the second phase, and it was greeted with criticism before it’s had any impact.” One of the main criticisms of any quantitative-easing plan is that it tends to weaken the country’s currency. But the U.S. dollar has improved about 2.5% since the Fed formally announced the program on Nov. 3. And it’s up Monday despite articles and ads asking the central bank to reconsider the program. See more on the dollar.

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