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CORRECTED-TREASURIES-Most U.S. yields rise as jobs data keeps hawkish policy bets alive
July 7, 2017 / 3:00 PM / 4 months ago

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

 (Corrects 8th paragraph to say 10-year Bund yields hit 18-month
high, instead of six-month high)
    * 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

    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 mixed details of a U.S. June employment report did
not derail expectations of tighter global central bank monetary
policy. 
    Trading was choppy in the Treasury market after the U.S.
jobs data, with yields initially tumbling and then quickly
reversing 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 from
4.3 percent in May, that was because more people were looking
for work, a sign of confidence in the labor market.
    While sluggish wage growth put a wrinkle in the otherwise
upbeat report and signaled lagging inflation, analysts said the
report did not alter expectations that the Federal Reserve would
raise interest rates again later this year and begin unwinding
its balance sheet. 
    With a hawkish Fed still in place, 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 2.396 percent and 30-year yields
hit a more than six-week high of 2.943 percent after the U.S.
jobs data. 
    Treasury yields were moving in tandem with rising yields in
Europe, with 10-year Bund yields hitting an 18-month
high on Friday of 0.58 percent. 
    Analysts attributed the stable to slightly lower status of
shorter-dated yields to the disappointing aspects of the U.S.
jobs report. U.S. two-year yields were last at 1.403
percent, from 1.406 percent late Thursday. 
    "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 10:48AM New York / 1448 GMT
                               Price                  
 US T BONDS SEP7               151-29/32    -0-12/32  
 10YR TNotes SEP7              124-236/256  -0-16/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.0225       1.0393    0.005
 Six-month bills               1.1225       1.1444    -0.001
 Two-year note                 99-180/256   1.4031    -0.003
 Three-year note               99-190/256   1.5902    -0.003
 Five-year note                99-18/256    1.947     0.005
 Seven-year note               98-156/256   2.2163    0.010
 10-year note                  99-240/256   2.382     0.013
 30-year bond                  101-112/256  2.9273    0.023
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        25.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap        21.00         0.50    
 spread                                               
 U.S. 5-year dollar swap         7.50         0.00    
 spread                                               
 U.S. 10-year dollar swap       -3.25        -0.75    
 spread                                               
 U.S. 30-year dollar swap      -31.50        -2.00    
 spread                                               
 
  

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