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TREASURIES-Prices rise as investors look to data later in week

Luciana Lopez
Monday, 4 Nov 2013 | 9:18 AM ET

* Factory orders data due 10 a.m. ET

* October nonfarm payrolls due Friday, GDP due Thursday

* Treasury quarterly refunding announcement due Wednesday

NEW YORK, Nov 4 (Reuters) - Prices for U.S. Treasuries edged slightly higher on Monday, retaking some of Friday's losses and keeping yields within recent ranges as investors looked ahead to key data later in the week as well as information on upcoming Treasury debt sales. Treasuries sank on Friday after stronger-than-expected factory activity data belied views that the economy struggled last month in the face of a federal government shutdown during the first half of October. While the shutdown was expected to drag on the economy, the manufacturing data suggested the damage could have been contained. Data this week could confirm that resilience or could underscore the vulnerability of the economy. "There's a lot of short-term risk, depending on whether data surprises to the upside," said Robert Tipp, chief investment strategist at Prudential Fixed Income, in Newark, New Jersey. Those data include factory orders for September, due at 10 a.m. ET on Monday. Economists in a Reuters poll expect September factory orders to have risen by 1.7 percent. But investors will especially be focused on the second half of the week. "This week's economic numbers, especially GDP and employment, will be critical to upcoming yield valuations," said Chris Bury, head of U.S. rates trading and sales at Jefferies & Co. On Thursday, third-quarter gross domestic product data will give a baseline for comparison with the fourth quarter, when the shutdown occurred over Republican efforts in Congress to undermine President Obama's signature healthcare law as a condition of funding the government. And on Friday, October nonfarm payrolls will be released. These reports were delayed because of the shutdown and are among the most important data for weighing future U.S. Federal Reserve monetary policy. Fed policymakers want to see the unemployment rate dropping closer to 6.5 percent from the current 7.2 percent. But economists in a Reuters survey expect that rate to have edged up in October to 7.3 percent. The Fed recently kept in place its $85-billion-per-month buying of mortgage-backed securities and Treasuries, although a statement from policymakers concluding a two-day meeting had a more hawkish tinge than some had expected. As a result, analysts broadly expect the Fed to begin tapering those asset purchases later than expected, perhaps well into 2014 rather than by the end of this year. Treasuries could remain rangebound in coming sessions, with investors reluctant to take on large positions until they have more certainty on the momentum in the economy. "This week, neutral data should lead to a 2.50 percent to 2.75 percent trading range on 10-year notes," Bury said. Prices for 10-year U.S. Treasuries rose 5/32 in price on Monday to yield 2.602 percent, compared to a yield of 2.62 percent late on Friday. The 30-year bond rose 7/32 in price to yield 3.685 percent, compared to a yield of 3.696 percent late on Friday. In addition, the U.S. Treasury on Wednesday will issue its quarterly refunding announcement, which will lay out funding needs for the next quarter and tell investors how much U.S. debt will be auctioned off by the government.