March 9, 2017 / 9:10 PM / in a year

TREASURIES-U.S. bond yields rise with Bunds ahead of jobs report

    * Longer-dated yields hit 11-week peaks; 5-year highest
since 2011
    * Rate-hike bets pin shorter-dated yields near 7-1/2 year
    * ECB signals less urgency for more monetary stimulus
    * 30-year supply sold at highest yield since 2014 on fair

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, March 9 (Reuters) - U.S. Treasury yields rose on
Thursday with longer-dated yields  reaching their highest in
about 11 weeks, in step with their German counterparts before
Friday's U.S. jobs report that may seal expectations the Federal
Reserve will raise rates next week.
    Shorter-dated Treasury yields climbed to their highest in
more than 7-1/2 years on bets of a pending rate increase.
    Decent payroll growth, together with a resumption of wage
growth last month, will likely propel Fed officials to make good
on what a number of them hinted last week on a rate hike at its
upcoming two-day meeting, analysts said.
    "They raised expectations so much for a rate hike. The only
thing that will stop them will be an extremely weak jobs report
and sharp downward revisions for January," said Karl Haeling,
vice president at Landesbank Baden-Wurttemberg in New York.
    Interest rates futures implied traders priced at a 91
percent probability that the U.S. central bank will raise
interest rates by a quarter point to 0.75-1.00 percent at its
meeting that begins next Tuesday, according to CME Group's
FedWatch program.
    Analysts polled by Reuters forecast that U.S. employers
likely added 190,000 workers last month, fewer than January's
227,000 and average hourly earnings likely grew 0.3 percent
following a 0.3 percent fall in January.
    The benchmark 10-year Treasury yield was up 4
basis points at 2.594 percent after touching 2.607 percent which
was the highest since Dec. 16, according to Reuters data.
    The two-year yield, which is most sensitive to
traders' view on Fed policy, was up nearly 2 basis points at
1.371 percent after hitting 1.379 percent which was last seen in
August 2009.    
    In earlier trading, U.S. and German yields rose after
European Central President Mario Draghi acknowledged economic
improvement in the euro zone, which may warrant less support
down the road
    "Draghi removed some of his earlier cautious language. On
balance it seemed a little less dovish," said Mike Lorizio,
senior fixed income trader at Manulife Asset Management in
    Draghi's comments and the ECB's mild upgrade on its growth
and inflation outlook on the euro zone spurred selling in German
Bunds, which spread to Treasuries.
    On the supply front, the Treasury Department sold $12
billion of 30-year bonds to average demand at a yield of 3.170
percent, the highest yield at a 30-year auction since September
    The 30-year bond sale was the last leg of this week's $56
billion supply of coupon-bearing U.S. government debt.
  March 9 Thursday 3:39PM New York / 2039 GMT
 US T BONDS JUN7               146-29/32    -1        
 10YR TNotes JUN7              122-212/256  -0-80/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.7175       0.7288    0.000
 Six-month bills               0.8675       0.8834    0.015
 Two-year note                 99-134/256   1.3706    0.017
 Three-year note               99-214/256   1.6813    0.021
 Five-year note                98-214/256   2.1229    0.042
 Seven-year note               98-28/256    2.4213    0.044
 10-year note                  97           2.5944    0.043
 30-year bond                  96-144/256   3.1788    0.034
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        32.25         1.00    
 U.S. 3-year dollar swap        24.00         1.25    
 U.S. 5-year dollar swap         8.75         0.75    
 U.S. 10-year dollar swap       -4.00         0.75    
 U.S. 30-year dollar swap      -39.50         1.25    

 (Reporting by Richard Leong; Editing by Alistair Bell and Diane
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