US Treasuries rise

US Treasury debt prices rose on Thursday as investors bet the Federal Reserve would keep interest rates on hold in the near-term after mostly below-forecast economic data confirmed slowing growth.
The yield on the benchmark 10-year Treasuries briefly dipped below 4.80 percent for the first time since late March. The inversion between the yield on the 2-year and 10-year notes hit its widest mark since early March.
"It is a consistent belief that if we are going into a slowdown, the long-end is going to be the better curve performer," said David Ader, treasury market strategist at RBS Greenwich Capital in Connecticut.
However, gains were limited as investors were cautious ahead of Fed Chairman Ben Bernanke's address on the economy on Friday. Investors were also taking stock after strong gains this week on the long-end of the yield curve, analysts said.
Benchmark 10-year notes were up 3/32 in price for a yield of 4.81 percent versus 4.82 percent late on Wednesday. Yields, which move inversely to their prices, briefly dipped to 4.79 percent early in the session.
"We are trading towards the upper range of the technical area," said Frank Hsu, director of global fixed income at Fimat USA in New York. "At this level people are not really eager to get involved in the market unless they have to. Most people are staying on the sidelines. At this level there is no real money eager to buy."
Treasury issues with longer duration have outperformed shorter-term securities this week with the yield on the 10-year note dropping 5 basis points since Monday while the 2-year note's yield has been unchanged.
Two-year notes were flat in price to yield 4.89 percent. Analysts said some investors were starting to believe that the Fed would start easing monetary policy early next year. The central bank left the fed funds rates unchanged at 5.25 percent this month after raising it 17 times over the past two-years.
"There is a strong sense now that the economy is weakening enough that the Fed will eventually have to lower interest rates," said Tony Crescenzi, chief bond market strategist at Miller, Tabak & Co.
"The long end can build in these interest rate cuts where as the short end can't because the timing of the cuts is uncertain. Today's data does not support the case for a near-term interest rate cut."
Sales of new US homes tumbled to a smaller-than-expected seasonally adjusted 1.072 million annualised rate in July and a key inventory measure jumped to a 10-year high, pointing to a rapidly cooling housing market, a government report showed on Thursday.
New homes sales fell 4.3 percent last month, the biggest drop since an 11.5 percent plunge in February and the lowest annualized rate since February as well, the Commerce Department said. Analysts polled by Reuters were expecting sales to ease to a 1.100 million annual rate. Meanwhile, new orders for US-made durable goods fell a much greater-than-expected 2.4 percent in July as civilian aircraft and car orders tumbled.
Analysts said the market would watch Bernanke's address for a fresh perspective of the Fed's views on the outlook for growth and inflation. Bernanke will speak at 10 am EDT (1400 GMT) at a conference including central bankers from other countries, held at the Rocky Mountain resort of Jackson Hole, Wyoming.
The 5-year Treasury note rose 1/32 in price to yield 4.77 percent versus 4.78 percent late on Wednesday. The 30-year bond rose 5/32 in price to yield 4.94 percent versus 4.95 percent late on Wednesday.