US Treasury debt prices were steady to lower on Wednesday as strength in stocks was offset by the Federal Reserve's cutting its US growth outlook and fears over the eventual outcome of the eurozone debt crisis. The Fed, in a statement following its policy meeting, said economic growth strengthened somewhat in the third quarter, although it did flag risks to growth that appeared to leave the door open for further monetary easing.
The central bank cut its forecasts for economic growth, and Fed Chairman Ben Bernanke said at a news conference that the pace of economic progress was likely to remain "frustratingly slow." "It seems Treasuries are held between, at the least, a steady Fed with some firmer tone to the data and next week's (debt) supply and, on the other side, the deep worry that Europe may unravel," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
After a three-day rally driven primarily by worries over contagion from Europe, benchmark 10-year Treasury notes traded unchanged in price to yield 1.99 percent, while 30-year Treasury bonds were down 8/32 to yield 3.01 percent from 3 percent late Tuesday.
Stocks rose on an upbeat ADP National Employment report that showed US private employers added 110,000 jobs in October, more than forecast. It also said more jobs were added in September than it had first reported. Major stock indexes traded over 1 percent higher. Treasury investors focused on Europe and guidance from the Fed.
"On the one hand the Fed downgraded their forecasts which has got to be good for Treasuries, but on the other hand they also said this may lead them to engage in more accommodation," said David Coard, head of fixed-income sales and trading at The Williams Capital Group in New York.
Also in focus was an EU rescue package for Greece demanding the debt-laden country impose more austerity measures. Treasuries on Tuesday had risen on a safety bid after Greece said it would put the plan, designed to prevent a sovereign default, up to a vote by its citizens. Analysts said reports on Wednesday about the timing and nature of the referendum went some way to improve investors' understanding of the vote. The US Treasury on Wednesday announced a $72 billion quarterly refunding of its 3-year, 10-year and 30-year debt securities, which will raise $48.1 billion in new cash next week.
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