* Quarter-end buying disappoints * Volatility seen muted pending fresh US jobs data * Long Treasuries post big first-half gains (Adds Treasuries downturn, comments) By Michael Connor NEW YORK, June 27 (Reuters) - U.S. Treasuries' prices turned lower on Friday after steady gains earlier in the week, fueled by data suggesting economic growth in America may be slower than policymakers believe.
Yields on Friday rose on thin volumes in part on profit-taking by traders, who saw benchmark 10-year Treasury notes drop by about 10 basis points Monday through Thursday, according to BNP Paribas interest-rate strategist Aaron Kohli.
"People had expected much stronger month-end and quarter end demand," Kohli said. "To some extent that has not materialized." Treasuries' price gains earlier in the week were supported by the government's sharp downward revision of its estimate of first quarter gross domestic product and by worse-than-expected consumer spending data for May.
"It is not the kind of dedicated and price insensitive buying the market had been expecting," Kohli said. "Most of the moves we have been seeing over the last few days have been a response to weak consumer expenditures or extremely disappointing GDP numbers." Signs of slower growth tend to bolster hopes the Federal Reserve will keep ultra-low interest rates in place longer.
"The market is not accepting the higher growth trajectory that the Fed and blue chip economists are telling us we will see in the second half," said Vishal Khanduja, portfolio manager for Calvert Investments. "That's why we aren't seeing much higher yields." In Friday's trading, yields on 30-year Treasuries moved the most, falling in early trading to as low as 3.336 percent, a level last touched on June 2. The bonds last traded down 12/32 in price to yield 3.3649.
Ten-year notes were down 2/32 in price to yield 2.5340 percent, after hitting a low of 2.507 percent.
Long Treasuries have done well over the last six months, according to preliminary data for the first half of 2014 ending Monday.
U.S. government debt was on track to earn a 2.65 percent in first half of 2014, led by a 13.04 percent on Treasuries that mature in 20 years or longer, according to indexes compiled by Barclays.
(----------------------------------------------) For a graphic on asset returns in early 2014, please see: YTD asset performance http://link.reuters.com/syf98v (----------------------------------------------) Looking ahead, trading in Treasuries was unlikely to get firm direction until the monthly employment report is released next week, Khanduja said.
The market "is digesting" the most recent data, Khanduj said. "It is looking for a lot more current information that's not backwards looking. So the biggest information we will get will be next week, when the we get the unemployment report." (Editing by Bernadette Baum and Tom Brown)