RTRS: TREASURIES-Prices gain as Bernanke speech in focus
By Karen Brettell
NEW YORK, Aug 30 (Reuters) - U.S. Treasuries gained in price
on Thursday as stocks retreated and investors focused on whether
Federal Reserve Chairman Ben Bernanke will hint at a third round
of bond purchases when he speaks on Friday.
Discounting the likelihood of the Fed launching new stimulus
when it meets next month has been the predominant trade over the
past few weeks, though there is also a lot of uncertainty over
what debt the Fed would purchase in any new program.
Atlanta Fed President Dennis Lockhart told CNBC on Thursday
that it will be a "close call," when Fed policymakers meet next
month to decide on new easing.
"It depends on whether or not you think you're going to walk
away tomorrow with a little bit of disappointment in Bernanke if
he doesn't announce anything," said Sean Murphy, a Treasuries
trader at Societe Generale in New York.
"I don't think that because you don't hear an official
launch from Bernanke tomorrow that QE3 is off the table for
September," he added.
Bernanke will speak at a symposium of central bankers in
Jackson Hole, Wyoming.
Improving economic data in early August had led some
investors to discount the likelihood of further stimulus being
introduced in the near term.
Others, however, say that the jobless rate is still too high
and growth too sluggish, making it more likely that the Fed will
act.
Benchmark 10-year notes gained 9/32 in price on
Thursday, to yield 1.63 percent. The notes have rallied from
1.86 percent at the beginning of last week, but remain higher
than record lows 1.38 percent reached on July 25.
Data on Thursday showed that the number of Americans filing
new claims for jobless benefits was unchanged last week, which
was higher than expectations. Separately personal spending rose
by 0.4 percent in July, to the highest since February 2012, and
personal income rose by 0.3 percent in the month.
Price gains were also seen as likely limited on Thursday
ahead of a $29 billion sale of new seven-year notes, the final
auction in this weeks $99 billion in new Treasury supply.
