July 7, 2017 / 8:00 PM / 16 days ago

TREASURIES-Most U.S. yields rise; jobs data keeps hawkish policy bets alive

5 Min Read

    * U.S. nonfarm payrolls jumped by 222,000 jobs in June
    * Yields initially fall before most turn higher on day
    * 10-year yield hits more than 8-week high
    * 2-,3- yr yields stable to lower on U.S. wage, unemployment
data

 (Updates prices, adds weekly data)
    By Sam Forgione
    NEW YORK, July 7 (Reuters) - Most U.S. Treasury yields rose
on Friday, with longer-dated yields briefly hitting multi-week
highs, after U.S. jobs data came in strong enough to keep
expectations alive for tighter global central bank monetary
policy. 
    Trading was choppy after the U.S. June employment report.
Treasury yields initially tumbled, then quickly reversed course.
Longer- and medium-dated yields were last higher on the day,
while shorter-dated yields were stable to slightly lower but
remained high on a historical basis. 
    Nonfarm payrolls jumped by 222,000 jobs, the U.S. Labor
Department said, beating economists' expectations for a gain of
179,000. While the unemployment rate rose to 4.4 percent, that
was because more people were looking for work.
    While sluggish wage growth put a wrinkle in the otherwise
upbeat report, analysts said it did not alter expectations that
the Federal Reserve would raise interest rates again this year
and begin unwinding its balance sheet. 
    Most yields resumed the uptrend they began last week on
anticipation that the Fed would tighten monetary policy roughly
in unison with the European Central Bank and Bank of England,
whose chiefs made suggestions last week that they were shifting
toward less accommodative policy. 
    "(The U.S. bond market) is not massively altering its course
based on this report," said Shyam Rajan, head of U.S. Rates
Strategy at Bank of America Merrill Lynch in New York. "I do
think strongly that we’ll go back to being driven by Europe.”
    Benchmark 10-year Treasury yields hit a more than eight-week
high of 2.398 percent and 30-year yields
hit a more than six-week high of 2.943 percent. 
    Yields were also rising in Europe, with 10-year Bund yields
 hitting an 18-month high on Friday of 0.58 percent. 
    U.S. 10-year yields were on track for their steepest
two-week increase in nearly four months. U.S. 30-year yields
were on course for their biggest two-week rise since just after
the Nov. 8 U.S. presidential election. 
    Analysts said shorter-dated yields were stable to slightly
lower due to disappointing aspects of the jobs report. 
    "The initial dip in rates was a function of the small
increase in the earnings number and the uptick in the
unemployment rate," said Kim Rupert, managing director of global
fixed income at Action Economics in San Francisco.
      
    July 7 Friday 3:46PM New York / 1946 GMT
                               Price                  
 US T BONDS SEP7               151-25/32    -0-16/32  
 10YR TNotes SEP7              124-228/256  -0-24/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.0175       1.0342    0.000
 Six-month bills               1.1175       1.1393    -0.006
 Two-year note                 99-180/256   1.4031    -0.003
 Three-year note               99-188/256   1.593     0.000
 Five-year note                99-12/256    1.952     0.010
 Seven-year note               98-152/256   2.2187    0.013
 10-year note                  99-228/256   2.3874    0.018
 30-year bond                  101-96/256   2.9305    0.026
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        24.50        -0.75    
 spread                                               
 U.S. 3-year dollar swap        20.25        -0.25    
 spread                                               
 U.S. 5-year dollar swap         6.75        -0.75    
 spread                                               
 U.S. 10-year dollar swap       -3.50        -1.00    
 spread                                               
 U.S. 30-year dollar swap      -32.00        -2.50    
 spread                                               
 
 (Editing by David Gregorio)
  

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