TREASURIES-Bonds little changed amid U.S. budget stalemate
* Corporate debt supply mitigates "fiscal cliff" jitters
* Fed to buy $1.50 bln to $2.25 bln in long-dated Treasuries
* Ten-year note yield finds support with 100-day MA
NEW YORK, Dec 4 (Reuters) - U.S. government debt prices were little changed on Tuesday as most investors kept to the sidelines in the absence of progress on the budget negotiation in Washington, that is seen as critical to avert a fiscal crisis and a U.S. recession. Competition from corporate bond supply and some early preparation for next week's federal debt sales mitigated concerns about the federal budget talks, analysts said. "When things are drifting like this, we see some money gravitating to investment-grade corporate bonds," said Jim Vogel, interest rate strategist with FTN Financial in Memphis, Tennessee. Analysts expected companies to sell $25 billion in debt this week, according to IFR, a unit of Thomson Reuters. Benchmark 10-year Treasury notes were up 1/32 in early trading with their yields at 1.616 percent. The 10-year yield has found chart support at its 100-day moving average at 1.65 percent, according to Reuters data. U.S. Treasuries prices have moved in a tight range since the U.S. presidential election nearly a month ago on the likelihood of a contentious process between President Barack Obama and Congressional Republican lawmakers to avoid the "fiscal cliff." The absence of a budget deal before year-end would cause a fiscal contraction as a series of automatic tax increases and spending cuts worth $600 billion are implemented, economists say. On Monday, the White House dismissed a "fiscal cliff" proposal from congressional Republicans that included tax reforms and spending cuts, saying it did not meet President Barack Obama's pledge to raise taxes on the rich.
Risk of a recession from failed budget talks will likely cause the Federal Reserve to cling to an ultra-loose monetary policy in an attempt to support an already wobbly economy. Fed policy-makers will meet next Tuesday and Wednesday, where they are widely expected to decide whether they will pursue further bond purchases. The Fed has been buying a combined $85 billion in Treasuries and mortgage-backed securities a month. Its Treasuries purchases have been linked to "Operation Twist" that will expire at the end of December. As of a part of "Operation Twist," the Fed will buy $1.50 billion to $2.25 billion in Treasuries that mature in Feb 2036 to Nov 2042 at 11 a.m. (1600 GMT).