Treasuries unchanged

US government debt prices were flat to slightly higher on Friday as resurgent equities curbed the safe-haven allure of Treasuries and investors avoided making decisive bets before next week's deluge of economic reports. Solid earnings news from Walt Disney Co and JC Penney Co Inc rekindled demand for US stocks, a day after the Dow snapped a six-day string of gains.
Even so, an unexpected drop in a measure of November US consumer confidence and a wider US trade deficit in September gave Treasury prices, particularly in the long-end, a cushion as investors took the data as pointing to an anemic economic recovery. In that context the US Federal Reserve would have room to keep to its pledge of ultra-loose monetary policy to foster a sustainable recovery, according to analysts.
"There's definitely a lot of cash out there as you can tell by the success of the auctions that we've seen." She characterised the market as lacking interest following this week's solid bidding for a record $81 billion in supply. All that the market had to rely on for direction this week were the three auctions of 3-year, 10-year and 30-year government paper for the Treasury refunding program.
By late Friday afternoon, the 10-year yield was on track for a 8-basis-point fall for the week after the recent auctions provided the latest clearest indication of continued appetite for US government debt. Firm demand at the government's November refunding signalled investor confidence in the United States' credit-worthiness even as the country grapples with ballooning deficits and the costs of bailouts and stimulus.
Against this backdrop, traders are monitoring US President Barack Obama's visit to Japan and China, two of the biggest US trading partners and holders of Treasuries. The price of the benchmark 10-year note was up 6/32, putting the yield, which moves inversely to their price, at 3.43 percent. The 30-year Treasury bonds, the US government's longest maturity, yielded 4.36 percent.
The price of the two-year Treasury note, which is more sensitive to expectations of changes in the federal funds rate, was unchanged, putting the yield at 0.82 percent. The index on US consumer sentiment unexpectedly fell in early November. The data underscored the need of continued monetary and perhaps more fiscal stimulus to put the world's largest economy on a sustainable recovery and forestall a double-dip recession. Next week's economic reports include readings on October retail sales, the Producer Price Index, industrial production, housing starts and leading indicators.