TREASURIES-Yields dip slightly after mixed economic data

       By Chuck Mikolajczak
    Sept 24 - U.S. Treasury yields fell on Thursday as labor
market data indicated the economic recovery may be stalling, but
moved off lows after a stronger-than-expected report on the
housing sector.
    Initial claims for state unemployment benefits increased
4,000 to a seasonally-adjusted 870,000 for the week ended Sept.
19, compared to 866,000 in the prior week and the 840,000
forecast. Data for the prior week was revised to show 6,000 more
applications received than previously reported.
    But a report from the Commerce Department that showed new
single-family home sales rose to their highest level in nearly
14 years in August helped yield pare declines, as the housing
market continues to be a bright spot even as the economic
recovery seems to be sputtering.
    The yield on 10-year Treasury notes was down 0.7
basis points to 0.669%.
    The yield on the 10-year remained within the 6-basis-point
range it has held since the Fed's most recent policy statement
on Sept. 16. On Thursday, Boston Federal Reserve Bank President
Eric Rosengren said the U.S. economy is far from maximum
employment or 2% inflation, and interest rates will stay low for
several years.
    "Investors are looking for some place to put their money and
this is probably the only market that has somewhat positive
yields," said Tom di Galoma, managing director at Seaport Global
Holdings in New York.
    "People want to sell the market because of what is going to
take place in the election, then there are those who need to buy
yield and any time the market backs up they are right in there."

    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was down 0.2
basis points at 0.137%.
    The Treasury will close out this week's auctions later today
with a sale of $50 billion 7-year notes, an increase of $3
billion from the August sale.
    A closely-watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 53.1 basis points, rebounding from a
two-week low of 51.2 hit on Monday.

      September 24 Thursday 10:44AM New York / 1444 GMT
 US T BONDS DEC0               176-24/32    0-9/32
 10YR TNotes DEC0              139-136/256  0-8/256
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.0975       0.0989    0.000
 Six-month bills               0.1075       0.1091    0.002
 Two-year note                 99-250/256   0.1367    -0.002
 Three-year note               99-232/256   0.1566    -0.002
 Five-year note                99-226/256   0.2736    -0.005
 Seven-year note               100-76/256   0.4564    -0.005
 10-year note                  99-148/256   0.6692    -0.007
 20-year bond                  98-224/256   1.1887    -0.017
 30-year bond                  99-48/256    1.4084    -0.017

                               Last (bps)   Net
 U.S. 2-year dollar swap         8.75         0.50
 U.S. 3-year dollar swap         8.25         0.75
 U.S. 5-year dollar swap         6.25         0.00
 U.S. 10-year dollar swap        1.50         0.50
 U.S. 30-year dollar swap      -34.75         1.00

 (Reporting by Chuck Mikolajczak
Editing by Nick Zieminski)

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