June 1, 2017 / 7:55 PM / 8 months ago

TREASURIES-Yields jump, then retreat after U.S. private payroll data

    * U.S. private employers added 253,000 jobs in May
    * 3-, 2-year yields hit at least one-week highs
    * Friday's U.S. non-farm payrolls data eyed
    * Yields pare rise after Trump decision on Paris climate

 (Updates prices, adds impact of Trump decision on Paris accord)
    By Sam Forgione
    NEW YORK, June 1 (Reuters) - U.S. short-dated Treasury
yields briefly touched at least one-week highs on Thursday after
strong data on U.S. private payrolls marginally boosted
expectations for more Federal Reserve interest rate increases in
2017, while caution ahead of Friday's jobs report limited the
    The ADP National Employment Report showed U.S. private
employers added 253,000 jobs in May, above estimates of 185,000
from economists surveyed by Reuters.
    The data reinforced expectations for a Fed rate hike at the
end of the central bank's June 13-14 meeting and may have
marginally boosted views that a September increase is still
possible, analysts said. That helped push up short-dated yields,
which are considered more vulnerable to Fed actions.
    The ADP figures come ahead of the U.S. Labor Department's
more comprehensive non-farm payrolls report on Friday, which
includes both public and private-sector employment. Economists
expect total non-farm employment to show an increase of 185,000
    The ADP data pushed yields on Treasuries maturing between
two and 30 years to session highs. Three-year yields
hit a one-week high of 1.465 percent, and the two-year's
 reached an eight-day peak of 1.314 percent. 
    "Even if ADP is off by, say, 60,000, the payrolls would be
180,000-ish, and that’s definitely consistent with a Fed hike in
June," said John Herrmann, director of interest rates strategy
at MUFG Securities in New York. "We think it’s consistent with
continued progress in the economy and possibly a hike in
    The move was brief, however. Yields soon stabilized and were
last standing just slightly higher on the day as caution
prevailed ahead of the U.S. May non-farm payrolls report and on
U.S. political uncertainty. 
    "There’s still a lot of potential distress for the markets,"
said Kim Rupert, managing director for fixed income at Action
Economics in San Francisco.
    Yields pared their rise in afternoon U.S. trading and neared
session lows after a White House document seen by Reuters said
Trump would announce that the United States would withdraw from
the landmark Paris climate agreement. Trump made the
announcement shortly afterwards.
    Benchmark 10-year Treasuries were last down 5/32
in price, with the yield at 2.217 percent from 2.198 percent
late on Wednesday. 
      June 1 Thursday 3:43PM New York / 1943 GMT
 US T BONDS SEP7               153-17/32    -0-9/32   
 10YR TNotes SEP7              126-48/256   -0-28/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.9575       0.9731    -0.005
 Six-month bills               1.0425       1.0625    -0.010
 Two-year note                 99-232/256   1.2977    0.020
 Three-year note               100-40/256   1.4456    0.017
 Five-year note                99-238/256   1.7648    0.017
 Seven-year note               99-212/256   2.0265    0.014
 10-year note                  101-104/256  2.2167    0.019
 30-year bond                  102-156/256  2.8695    0.012
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        22.75         0.25    
 U.S. 3-year dollar swap        20.50         0.25    
 U.S. 5-year dollar swap         7.50         0.00    
 U.S. 10-year dollar swap       -6.00         0.25    
 U.S. 30-year dollar swap      -44.25         0.00    

 (Reporting by Sam Forgione; Editing by Lisa Von Ahn)
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