TREASURIES-Prices slip, Fed meeting in focus
* Corporate issuance and related rate-lock selling cited
* Two-day Fed meeting in focus; statement due Wednesday
* Fed statement to be analyzed for hints of tapering timeline
* Q2 GDP, GDP revisions, ISM, monthly jobs report key data this week
NEW YORK, July 29 (Reuters) - Prices of U.S. Treasuries slipped on Monday as investors waited for this week's Federal Reserve policy statement and key economic data due in the second half of the week. Traders said the prospect of some large corporate debt issuance this week and related rate-lock selling weighed on Treasury prices. "A couple of large corporate deals are in the pipeline," noted Ian Lyngen, senior government bond strategist at CRT Capital Group LLC in Stamford, Connecticut. Some large sellers of bunds in London, real money selling five-year Treasuries, and the perception the Fed will taper some of the bond purchases that comprise its quantitative easing policy helped weigh on Treasury prices, said Thomas di Galoma, one of the heads of bond trading at ED&F Man Capital Markets. "Also, there is a ton of chatter that the non-farm U.S. payrolls data due on Friday will be more robust than previously thought due to auto worker hiring," he added. Benchmark 10-year notes slipped 4/32 in price, their yields edging up to 2.59 percent from 2.57 percent late on Friday. Ten-year yields have ranged from around 2.43 percent to 2.63 percent in the last two weeks, after hitting two year highs of 2.76 percent on July 8. "Activity is very light," said John Briggs, managing director at RBS in Stamford, Connecticut. "European fixed income has leaked lower." Traders said the Fed's statement, due on Wednesday, will be analyzed for hints as to when the U.S. central bank is likely to adjust its bond purchase program. But the spotlight will be on economic data as well, because the Fed has said its policy depends on what the data reveal about how the economy is faring. Consumer confidence and home price data are due on Tuesday, but Wednesday brings the July ADP private sector employment report and the advance estimate of Q2 GDP, along with GDP benchmark revisions. The Institute for Supply Management (ISM) manufacturing and non-manufacturing indexes are due Thursday and Friday, respectively. And the most influential report, the Labor Department monthly employment figures, is due on Friday. Data on pending U.S. home sales, due at 10 a.m. (1400 GMT), will get a glance since investors are watching the housing sector carefully to see whether it can recover strongly enough to help fuel economic growth.
EYE ON THE FED Most economists and investors expect the Fed to reduce the size of the program in September, but some believe growth will be subdued enough to forestall cutbacks until later in the year. The Fed's meeting starts Tuesday. A statement will be released at the conclusion of the meeting on Wednesday. The Merrill Lynch MOVE index, which estimates future volatility of long-term bond yields, slipped to 81.6 from 82.6 on Friday. The index has fallen from 118 on July 5. The Fed will buy between $2.75 billion and $3.50 billion in notes due 2020-2023 on Monday. The Treasury's quarterly refunding announcement for on Wednesday will also be a focus for the market. Some analysts expect the U.S. government to start cutting the size of its coupon-bearing debt sales for the first time since September 2010, as the falling deficit reduces its funding needs. Any cuts are seen likely to start in the shortest maturities, such as two-year and three-year notes, before moving to longer-dated debt. Investors will also be watching for any new information about the Treasury's plan to introduce floating-rate notes, which are expected as soon as the fourth quarter of the year.