October 4, 2016 / 1:46 PM / 10 months ago

TREASURIES-Yields rise as Friday's jobs data in focus

3 Min Read

* Friday's jobs report for September in focus
    * Yellen speech next week watched for rate view

    By Karen Brettell
    NEW YORK, Oct 4 (Reuters) - U.S. Treasury yields rose to
one-and-a-half week highs as investors looked ahead to Friday's
highly anticipated employment report for further clues on when
the Federal Reserve is likely to raise interest rates, with no
major new data due on Tuesday.
    Richmond Federal Reserve President Jeffrey Lacker, who is
not a voting member of the Fed's rate-setting committee, on
Tuesday said there was a strong case for raising interest rates,
arguing that borrowing costs might need to rise significantly to
keep inflation under control. 
    Yields also rose on Monday after  data showed U.S. factories
ramped up activity in September, with the sector now expanding,
boosting confidence in the economy. 
    Investors will be focused on whether August's weaker than
expected 151,000 jobs gains will be revised upward when the
labor data is released on Friday.
    "The market is anticipating that it will be revised up for
the August number," said Lou Brien, a market strategist at DRW
Trading in Chicago.
    Employers are expected to have added 175,000 jobs in
September, according to the median estimate of 100 economists
polled by Reuters. 
    Benchmark 10-year notes were last down 4/32 in
price to yield 1.64 percent, the highest since Sept. 22.
    A speech by Fed Chair Janet Yellen on Oct. 14 at an economic
conference at the Boston Fed will then be closely watched for
any signals that a rate hike is pending.
    "I think the most important thing in the next couple of
weeks is Yellen's speech at the Boston Fed economics
conference," said Brien, noting the conference was used by
former Fed Chair Ben Bernanke in 2010 to indicate a new round of
stimulus was coming.
    It may be Yellen's last chance to indicate if a rate
increase is likely at the central bank's November meeting.
    Traders are currently pricing in only an 11 percent chance
that the Fed will raise rates in November, and a 62 percent
chance of an increase in December, according to the CME Group's
FedWatch Tool.

 (Editing by Chris Reese)

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