TREASURIES-U.S. yields fall as Goldilocks economy view intact

       By Chuck Mikolajczak
    NEW YORK, July 6 (Reuters) - U.S. Treasury yields fell on
Tuesday, with the benchmark 10-year note on track for its
longest streak of declines in 16 months as investors look for
signals on the Federal Reserve's policy path and after data
signaled the service sector slowed.
    A gauge of activity from the Institute for Supply
Management on the U.S. services sector, which accounts for
about two-thirds of economic activity, showed moderate growth
in June, down from the record pace in May.
    The data comes on the heels of Friday's employment
report, which was viewed by many as showing an improving
labor market, but not enough to signal an economy that may be
prone to overheating.
    "From an economic data standpoint, now you have a couple
of big data pieces that are pointing to an economy that is
not running hot, there is that piece which is very good and
you definitely see yields reflecting that," said Jim Barnes,
director of fixed income at Bryn Mawr Trust in Berwyn,
    "You definitely have that somewhat Goldilocks
    The yield on 10-year Treasury notes was down
8.1 basis points to 1.352%. The yield hit a low of 1.352%,
its lowest since February 24 and was on track for a sixth
straight session of declines.
    Investors will turn their focus to Wednesday's release of
the Fed's June 16-17 meeting, when officials opened debate on
how to end crisis-era bond-buying and signaled interest rate
increases were closer on the horizon than previously thought.
    The yield on the 30-year Treasury bond was
down 7.7 basis points to 1.973%.
    The breakeven rate on five-year U.S. Treasury
Inflation-Protected Securities (TIPS) was last
at 2.49%, after closing at 2.502% on Friday, near its highest
close in a month.
    The 10-year TIPS breakeven rate was last at
2.329%, indicating the market sees inflation averaging 2.3% a
year for the next decade.

      July 6 Tuesday 10:56AM New York / 1456 GMT
 US T BONDS SEP1               162-19/32    1-22/32
 10YR TNotes SEP1              133-92/256   0-176/25
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.05         0.0507    0.000
 Six-month bills               0.0525       0.0532    0.000
 Two-year note                 99-208/256   0.2199    -0.018
 Three-year note               99-140/256   0.4052    -0.038
 Five-year note                100-98/256   0.7965    -0.065
 Seven-year note               100-228/256  1.117     -0.079
 10-year note                  102-132/256  1.3515    -0.081
 30-year bond                  109-8/256    1.9732    -0.077

                               Last (bps)   Net
 U.S. 2-year dollar swap         7.75       -23.50
 U.S. 3-year dollar swap        11.75       -44.00
 U.S. 5-year dollar swap         7.50         0.00
 U.S. 10-year dollar swap       -2.75        -0.25
 U.S. 30-year dollar swap      -31.75        -0.50

 (Reporting by Chuck Mikolajczak)

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