Macroeconomic News

By Chris Reese and Luciana Lopez

NEW YORK, Aug 10 (Reuters) - U.S. Treasury debt prices rose

on Friday, recovering somewhat from losses earlier in the week,

as concerns about global growth spurred safe-haven buying and

investors looked ahead to U.S. inflation and retail sales data

next week.

Investors also bought U.S. government debt after the

Treasury auctioned $72 billion of coupon-bearing securities in

its quarterly refunding this week.

The economic worries were sparked by weaker-than-forecast

Chinese trade and other data.

'It seems to be another risk-off type of move. The big

component was the weak data out of China, which exacerbated

fears of a global slowdown,' said Kim Rupert, managing director

of global fixed income analysis at Action Economics in San

Francisco.

China's exports grew 1.0 percent year-on-year in July, far

below market expectations of an 8.6 percent rise, while imports

grew 4.7 percent, against a 7.2 percent forecast.

The benchmark 10-year U.S. Treasury note rose 11/32 in price

to yield 1.657 percent, down from 1.69 percent late Thursday.

Thirty-year Treasury bonds were trading with a

yield of 2.746 percent, down from a high yield of 2.83 percent

in an auction of $16 billion of the bonds on Thursday.

Next week investors will focus on reports on July U.S.

retail sales, expected to rise 0.3 percent, and consumer prices,

expected to gain 0.2 percent.

'They generally should be fairly positive data,' said Kevin

Cummins, an economist at UBS Securities in New York. 'That

should add to some better tone of data that we've gotten

recently.'

But lingering questions remain about whether the U.S.

Federal Reserve could launch another round of quantitative

easing to prop up the sluggish economy, Cummins said.

Despite improved U.S. hiring last month, most Wall Street

economists still expect the Federal Reserve to do more to

stimulate growth this year, with the majority looking for action

as soon as September.

The Treasury's sales of 3-year, 10-year and 30-year

securities this week were met with tepid demand.

'Treasuries have had a bit of a tough week, and you're

seeing a bit of a comeback here, giving buyers a bit of a

chance,' Rupert said, adding that 'the auctions are out of the

way and that is helping.'

Safe-haven interest also supported Treasuries on fears about

the debt crisis in Europe and worries that Spain and Italy may

require massive financial bailouts. Economists said even

stalwart Germany was stalling economically and could fall into

recession in the second half of this year.

Uncertainty over when the European Central Bank will resume

bond purchases and how effective this will be in lowering

Spanish and Italian yields, and easing the euro zone's debt

crisis, has underpinned safe-haven Treasuries.

Despite higher prices on Friday, benchmark yields are up for

the week from 1.57 percent late last Friday, and have been

rising steadily since touching a record low of 1.38 percent on

July 25.

'We think we can go a little bit higher from here in terms

of how high Treasury yields can go, but there is going to be a

cap because of everything happening in the world,' said Scott

DiMaggio, director of global fixed income with AllianceBernstein

in New York.

'Yields were driven to historical lows in the U.S., Germany,

the UK and several other countries, so the market got itself

very long,' DiMaggio said, adding that comments from ECB

President Mario Draghi committing to take whatever measures

necessary to save the euro zone had undermined Treasury debt

prices and pushed yields higher in recent weeks.

However, global economic uncertainty will likely mean yields

will remain at historic lows in coming months, DiMaggio said.

'Treasuries are going to remain anchored,' he said. 'Can we

get to 1.75 percent? Can we get to 2 percent? Yes, probably, but

we think 2 percent would be a cap.'



(Additional reporting by Marius Zaharia in London; Editing by

Kenneth Barry)

((luciana.f.lopez@thomsonreuters.com)(+1 646 223 6319)(Reuters

Messaging: luciana.f.lopez.thomsonreuters.com@reuters.net))



(-------MARKET SNAPSHOT AT 4:01 p.m. EDT (2001 GMT)------- Sept T-Bond 148-22/32 (+14/32) Sept 10-Year note 133-21/32 (+06/32) Change vs Current Nyk yield Three-month bills 0.1025 (-0.01) 0.104 Six-month bills 0.135 (-0.01) 0.137 Two-year note 99-23/32 (+01/32) 0.265 Five-year note 99 (+05/32) 0.705 10-year note 99-23/32 (+11/32) 1.657 30-year bond 100-03/32 (+15/32) 2.746 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 20.25 (-0.25) U.S. 3-year dollar swap spread 18.25 (unch) U.S. 5-year dollar swap spread 20.25 (unch) U.S. 10-year dollar swap spread 10.75 (unch) U.S. 30-year dollar swap spread -22.25 (-1.00))

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