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TREASURIES-Prices fall as jobless data stirs optimism on economy
March 7, 2013 / 5:42 PM / 5 years ago

TREASURIES-Prices fall as jobless data stirs optimism on economy

* ECB stays put on rates, avoids dramatic action
    * Bank of England holds back on more stimulus
    * U.S. jobless claims unexpectedly fall

    By Luciana Lopez
    NEW YORK, March 7 (Reuters) - Prices for U.S. Treasuries
fell on Thursday as a surprise drop in jobless claims added to
signs of a strengthening labor market, raising hopes the world's
largest economy was gaining steam.
    The number of Americans filing new claims for unemployment
benefits fell to a seasonally adjusted 340,000 last week. The
data came a day after a report showed unexpectedly strong hiring
by private employers last month. 
    "This is not a sign of a slowly growing economy," said Chris
Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi
UFJ in New York. "This is not an economy that needs to be
strengthened by Federal Reserve policy four years after the
recession ended."
    Still, he said, "the bond market remains focused, to the
extent it trades at all with the 800 pound gorilla of Fed QE on
its back, on the unemployment rate."
    The government will release its closely watched monthly
report on the labor market on Friday, and traders are unlikely
to take big risks ahead of that, Rupkey said. 
    Benchmark 10-year Treasury notes slipped 14/32
in price to yield 1.986 percent, from 1.9427 percent on
Wednesday.  
    Prices for 30-year bonds dropped 24/32 to yield
3.193 percent, from 3.1557 percent late Wednesday.  
    
    Payrolls processor ADP on Wednesday reported that U.S.
private employers added 198,000 jobs in February. ID:nEAPA60EH0]
    The ADP report and Thursday's jobless claims boosted hopes
that Friday's Labor Department payrolls report will beat
expectations.
    That report is key because the Fed has said it will keep
interest rates near zero until the unemployment rate falls to
6.5 percent, as long as inflation does not threaten to top 2.5
percent.
    Analysts in a Reuters poll, expect the jobless rate in
February to have remained unchanged from January's 7.9 percent.
    The Fed's support has helped fuel global appetite for
riskier assets, with the bank buying $85 billion per month of
mortgage-backed securities and Treasuries through the year.
    Other central banks on Thursday proved cautious about
changing their policy stance.
    The European Central Bank kept interest rates steady, and
bank chief Mario Draghi suggested the bank is in no mood to
act. 
    Analysts said Draghi's remarks walked the line between
dovish and hawkish. 
    "All in all, Mario Draghi today had a bit for everyone,"
said Carsten Brzeski of ING Bank. "In fact, Draghi gave an
elegant 'we-never-pre-commit' show, keeping all options open."  
    In addition, the Bank of England held fire on more economic
stimulus on Thursday, declining to launch a new round of
government bond purchases.

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