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TREASURIES-U.S. yields keep climbing on Dec. Fed rate hike bets
November 3, 2015 / 4:21 PM / 2 years ago

TREASURIES-U.S. yields keep climbing on Dec. Fed rate hike bets

* Traders prepare for Dec. Fed rate hike

* 2-10-yr yields hit over 6-wk highs

* 30-yr yields hit nearly 2-wk high

* U.S. Oct. jobs report eyed

By Sam Forgione

NEW YORK, Nov 3 (Reuters) - U.S. Treasury yields broadly continued to climb on Tuesday, with yields on U.S. government debt maturing between 2-10 years hitting over six-week highs on continued bets that the Federal Reserve will hike interest rates in December.

Analysts said traders are betting that Friday’s U.S. October employment report, which economists expect will show U.S. employers added 180,000 jobs according to a Reuters poll, will support the view that the Fed will hike rates for the first time since 2006 in December.

The rise in yields, which was more pronounced among yields on Treasuries maturing between 2-7 years since those securities are deemed more vulnerable to Fed rate hikes, continued a push higher that began when the U.S. central bank put a December rate hike firmly in play on Oct. 28.

“It’s just people taking chips off the table in terms of preparing for a rate hike in December,” said Charles Comiskey, head of Treasuries trading at Bank of Nova Scotia in New York.

Yields on benchmark 10-year Treasury notes hit 2.2070 percent, their highest level since Sept. 21, while yields on Treasury notes maturing between 2-7 years hit their highest levels since Sept. 17. U.S. 30-year Treasury yields hit a nearly two-week high of 2.9774 percent.

Analysts also said expectations that Fed Vice Chairman Stanley Fischer and New York Fed chief William Dudley would assume a hawkish tone in comments on Wednesday contributed to the upward momentum in Treasury yields.

“When we’ve just had a statement which is quite hawkish, and we have two of the big three, it’s not a time to go long,” said David Keeble, global head of interest rates strategy at Credit Agricole in New York, in reference to the Fed policymakers.

Interest rates futures markets indicate a 50 percent probability of a Fed move in December, according to CME Group’s FedWatch program. The Fed’s first rate hike is expected to hurt Treasuries prices.

U.S. 10-year notes were last down 5/32 in price to yield 2.2051 percent, from a yield of 2.1850 percent late Monday. U.S. two-year notes were last down 1/32 in price to yield 0.7740 percent and holding at a a session high after ending Monday at 0.7530 percent.

U.S. five-year notes were last down 4/32 in price to yield 1.5908 percent after hitting a session high of 1.5910 percent and ending Monday at 1.5640 percent. (Reporting by Sam Forgione; Editing by Frances Kerry)

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