The strength of "the data is comforting," said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York, a primary dealer. "It has to be followed by a stronger employment report. If not, then tapering is off for December."
The central bank plans to purchase $45 billion in Treasuries in December via 18 operations, including two each on Dec. 3 and Dec. 19, according to a statement published on the Fed Bank of New York website.
Fed Chairman Ben Bernanke said last week the central bank will probably hold down its target interest rate long after ending $85 billion in monthly bond purchases. The Federal Open Market Committee meets Dec. 17-18.
"We see a slight increase in Treasury yields into year- end," said Hendrik Lodde, a fixed-income strategist at DZ Bank in Frankfurt. "They probably won't start to taper this year, March could be the date. It's data-based so if the unemployment rate comes down fast maybe we'll change our view."