TREASURIES-Bonds slip on weak auction, Fed outlook eyed

    * Bonds assess economic growth, Fed outlook 
    * February durable goods orders weaker than forecast 
    * Tepid demand for five-year Treasury note auction 
    * Fed purchases cut session's steepest losses 
 
 (Updates prices, comment)  
    By Ellen Freilich  
    NEW YORK, March 28 (Reuters) - U.S. Treasuries prices fell 
on Wednesday after weak demand for a debt sale dampened gains 
built on Federal Reserve Chairman Ben Bernanke's assurances U.S. 
interest rates will remain low.  
    In a day of choppy trade, the lackluster reception for $35 
billion in five-year notes overshadowed weaker than forecast 
durable goods orders that earlier lifted bond prices from 
session lows.  
    Another influence was the Fed's purchase of $4.81 billion of 
Treasuries maturing between August 2020 and November 2021. The 
purchases helped the bond market erase its morning losses, 
leaving it flat to slightly higher by early afternoon before the 
Treasury auction.  
    Treasury losses widened when the stock market began to erase 
some of the day's worst losses and the S&P 500 index clung to 
the 1,400 level, hurting the bid for safe-haven U.S. debt.  
    In afternoon trade, the benchmark 10-year Treasury note 
 US10YT=RR  was down 5/32, its yield rising to 2.20 percent from 
2.18 percent late on Tuesday.  
    "The market is still trying to digest Ben Bernanke's recent 
remarks to determine where yields should be at this point," said 
James Barnes, senior fixed income portfolio manager at National 
Penn Investors Trust Company in Wyomissing, Pennsylvania.  
    "The market has to weigh the last FOMC policy statement and 
what Ben Bernanke has said since then and decide whether the 
first move up in rates will be as late as 2014," Barnes said.  
    Bonds gave back some of Tuesday's gains, as traders pared 
back bullish bets in anticipation of possible hints from Federal 
Reserve Chairman Ben Bernanke in a rare television interview 
that the U.S. central bank might embark on a third round of 
large-scale bond purchase, known as QE3, to boost sluggish U.S. 
economic growth.     
   Bernanke told ABC news on Tuesday, "It's far too early to   
declare victory" in the domestic recovery, a view which he   
expressed on Monday. Those remarks helped shore up the bond   
market after it saw the worst weekly sell-off since last   
June more than a week ago.    
   Despite some promising signs from the labor market and less   
financial distress in Europe, Bernanke said, "We need to be   
cautious and make sure this is sustainable."  
   The improvement in the U.S. economy appears to have   
plateaued with mild pullbacks in housing and manufacturing   
activities. More data suggesting first-quarter gross domestic   
product  USGDP  could fall short of an expected 1.9 percent   
growth rate could stoke recession fears and fuel bets the Fed   
would implement QE3.     
   The government said durable goods orders  USDGN=ECI  rose   
2.2 percent in February after a surprising 3.6 percent drop in   
January. Analysts had predicted a 3.0 percent increase.  ECONUS  
   
   The mildly weaker-than-expected readings on demand for   
airplanes, refrigerators and other big-ticket items helped the   
market pare losses, but they were not enough to change the   
market direction.    
   The 30-year bond  US30YT=RR  was down 8/32, its yield rising 
to 3.31 percent from 3.30 percent on Tuesday. The 30-year   
is below its 4-1/2-month high of 3.4920 percent set last Monday   
and its 200-day moving average of 3.3628 percent.    
      
  
 (Additional reporting by Richard Leong; Editing by Andrew Hay)  
   
 

 
((((-------MARKET SNAPSHOT AT 3:36 p.m. EDT (1936 GMT)-------  
June T-Bond  USM2            138-09/32  (-01/32)            
June 10-Year note  TYM2      129-19/32  (-01/32)            
                                       Change vs    Current  
                                          Nyk        yield  
Three-month bills US3MT=RR   0.080       (+0.00)     0.081  
Six-month bills   US6MT=RR   0.140       (+0.00)     0.142  
Two-year note  US2YT=RR      99-26/32   ( unch )     0.344  
Five-year note  US5YT=RR     99-07/32   (-02/32)     1.033  
10-year note   US10YT=RR     98-07/32   (-05/32)     2.201  
30-year note  US30YT=RR      96-17/32   (-08/32)     3.310                               
DOLLAR SWAP SPREADS  
                                          LAST      Change  
U.S. 2-year dollar swap spread            23.50     (-0.25)  
U.S. 3-year dollar swap spread            24.00     (+1.00)  
U.S. 5-year dollar swap spread            23.75     (+1.00)  
U.S. 10-year dollar swap spread            6.50     (+1.00)  
U.S. 30-year dollar swap spread          -30.55     (+0.25) 

     
Wednesday, 28 March 2012 09:45:44RTRS  urn:newsml:reuters.com:*:nL2E8ESGLV  {C}ENDS     
     
    ))