Treasuries prices mixed

US Treasuries prices were mixed on Thursday in light, choppy trading, and long bonds were boosted by the Federal Reserve's final buyback of the year. Traders, however, discounted attributing too much meaning to price moves as investors prepared for the slow holiday period.
Long-dated bond prices were higher, though they gave back much of their gains after the Fed bought $4.62 billion in 10-year notes, its final purchase this year in its "Operation Twist" program that is designed to lower longer term borrowing rates. "The buyback is helping a little bit," said James Combias, head of government bond trading at Mizuho Securities in New York. That said, "there's not a whole lot going on."
Trading volumes have been failing off since the Treasury completed its last auction of coupon debt on Wednesday, when it sold $29 billion in seven year notes. Volumes are expected to continue to slide and remain very thin until the majority of traders return from holidays in the new year.
"Investors are stepping in before the holidays, (but) overall, activity seems to be getting thinner with each passing day of the week," said Kevin Flanagan, managing director and chief fixed income strategist at Morgan Stanley Smith Barney in Purchase, New York.
Bonds showed little reaction to more positive economic releases on Thursday, including a drop in jobless claims, consumer sentiment increasing to a six-month high and a barometer of future activity rising for the seventh straight month in November. "We're continuing to see better than expected economic data which should be driving the yield curve higher and steeper," said Robert Tipp, chief investment strategist for Prudential Fixed Income in Newark, New Jersey, with $240 billion in assets under management.
"Instead we're seeing the curve lower with a tendency to flatten," he said. Benchmark 10-year notes were last up 2/32 in price to yield 1.96 percent, down from 1.97 percent late on Wednesday. Thirty-year bonds rose 9/32 in price to yield, from 3.00 percent on Wednesday. The yield gap between 2-year and 30-year notes fell to 271 basis points from 273 basis points on Wednesday.