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TREASURIES-Bonds pare price gains as Yellen's upbeat on jobs
December 19, 2016 / 8:07 PM / 9 months ago

TREASURIES-Bonds pare price gains as Yellen's upbeat on jobs

(Recasts with Yellen speech; adds quotes, updates prices)
    * Yellen gives upbeat view of jobs markets
    * Short covering seen helping prices gain
    * Russian ambassador shot in Turkey

    By Karen Brettell
    NEW YORK, Dec 19 (Reuters) - U.S. Treasury prices rose on
Monday as investors were seen covering short positions heading
into year-end, but gave up some gains after Federal Reserve
Chair Janet Yellen gave an upbeat view of the jobs market.
    Yellen did not mention monetary policy in her speech at the
University of Baltimore's mid-year commencement, but noted that
college graduates were entering the strongest jobs market in
nearly a decade. 
    "There was a surprise factor that she would mention anything
that was related to the market or the economy at commencement,"
said Lou Brien, a market strategist at DRW Trading in Chicago.
"People who may have been day trading may have took some profit
up there."
    Yields hit session lows before Yellen's speech after news
that the Russian ambassador to Ankara was shot in an attack at
an art gallery in the Turkish capital. A spokeswoman for the
Russian foreign ministry said he died of his wounds.
 
    Gennadiy Goldberg, an interest rate strategist at TD
Securities in New York, said that the news "does seem to
coincide with the latest move (in Treasury yields) lower and the
intraday high in stocks."
    U.S. Treasuries are seen as a low-risk asset when there is
political or other uncertainty.
    Bond prices opened stronger early on Monday as some
investors covered short positions heading into the year-end
holidays.
    Commitments of Traders data indicates that bond investors
hold the largest short positions on record, said Ian Lyngen,
head of U.S. rates strategy at BMO Capital Markets in New York.
    "The notion that we're due for a short-covering bounce as we
head into year-end is not surprising," Lyngen said.
    Benchmark 10-year notes were last up 12/32 in
price to yield 2.55 percent, after falling as low as 2.53
percent on news of the shooting in Turkey. The yields are down
from 2.60 percent late on Friday.
    Yields hit multi-year highs last week after the Fed's
economic and interest rate outlook at its meeting on Wednesday
was also viewed as more hawkish than expected. 
    Data on Thursday, including the third estimate of
third-quarter gross domestic product and personal income and
spending, will next be watched for further indications about the
strength of the U.S. economy.
    

 (Editing by Dan Grebler)

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