TREASURIES-Prices rise before three-year note sale
* Growth, Greece worries stoke safety bids for bonds
* U.S. to sell $32 bln in 3-year note supply
* Fed to buy $1.75 bln to $2.25 bln in long-dated debt
* Long bond yield holds above 200-day moving average
By Richard Leong
NEW YORK, Oct 9 (Reuters) - U.S. Treasuries prices rose on Tuesday in advance of a three-year debt sale as safe-haven bids for bonds emerged on anxiety about weak global growth and Greece's ability to meet the terms of a bailout.
Those worries overshadowed a government report last Friday which showed the U.S. jobless rate falling to 7.8 percent, its lowest level since January 2009. This and other surprisingly upbeat aspects of the September payroll data led to a sell-off in Treasuries and pushed benchmark yields to their highest levels in about two weeks.
The U.S. bond market was closed on Monday due to the Columbus Day holiday.
The International Monetary Fund, one of Greece's main lenders, said in a report on Tuesday that Athens would miss the five-year debt reduction target that is one of the conditions for the country's 130 billion euro bailout.
The group also warned that the United States faces meager growth of about 2.0 percent this year and in 2013 and predicted a 0.4 percent contraction in the euro zone's economy this year. It also downgraded its outlook on China, the world's second largest economy.
The IMF latest outlook "was adding to the downbeat sentiment. It was a confirmation of slow growth globally," said Gennadiy Goldberg, an interest rate strategist with TD Securities in New York. "That's why we are setting back into this trading range."
Safe-haven appetite for Treasuries was mitigated by some selling by bond dealers in anticipation of this week's $66 billion in coupon supply.
The Treasury Department will sell $32 billion in three-year notes at 1 p.m. (1700 GMT). It will sell $21 billion in 10-year debt on Wednesday and $13 billion in 30-year bonds on Thursday.
Traders expected the upcoming three-year note
to sell at a yield of 0.349 percent early Tuesday, compared with 0.337 percent at last month's auction.
Also on the supply front, the Federal Reserve will resume its Operation Twist which involves the selling of shorter-dated Treasuries and purchases of longer-dated issues in a bid to hold down long-term borrowing costs and to help the economy. It plans to buy $1.75 billion to $2.25 billion in Treasuries due in Feb 2036 to Aug 2042.
Fed Vice Chairwoman Janet Yellen was scheduled to speak at 8:30 p.m. (0030 GMT Tuesday) about sovereign risk and financial markets at an event sponsored by the IMF and the Japanese ministry of finance.
On the open market, benchmark 10-year notes
up 5/32 in price to yield 1.72 percent, down 2 basis points from late on Friday.
rose 13/32 in price to yield 2.952 percent, down 2 basis points from Friday's close. The 30-year yield held its 200-day moving average of 2.939 percent, according to Reuters data.
(Reporting by Richard Leong; Editing by Kenneth Barry)
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((-------MARKET SNAPSHOT AT 8:49 a.m. EDT (1249 GMT)------- Dec T-Bond 147-22/32 (-18/32) Dec 10-Year note 132-31/32 (-10/32) Change vs Current Nyk yield Three-month bills 0.1 (+0.00) 0.101 Six-month bills 0.14 (+0.00) 0.142 Two-year note 99-31/32 (+) 0.262 Five-year note 99-25/32 (+01/32) 0.670 10-year note 99-03/32 (+02/32) 1.727 30-year bond 95-32/32 (+11/32) 2.953 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 12.75 (-1.00) U.S. 3-year dollar swap spread 12.00 (-1.25) U.S. 5-year dollar swap spread 13.75 (-0.25) U.S. 10-year dollar swap spread 6.00 (-0.25)
U.S. 30-year dollar swap spread -21.50 (-0.25)))
Keywords: MARKETS USA BONDS/