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Bonds News

TREASURIES-Upbeat October jobs report pushes yields higher

 (Recasts, updates yields, adds analyst comments, October jobs
data, and next week's supply)
    Nov 6 (Reuters) - U.S. Treasury yields climbed higher on
Friday, lifted by better-than-expected October employment data,
while the market kept a close eye on the latest election
developments that showed Democrat Joe Biden with slight leads in
two undecided states.
   The benchmark 10-year yield was last up 5.2 basis
points at 0.8303%, while the 30-year yield jumped
6.5 basis points to 1.6096%.
     The October unemployment rate fell to a lower-than-expected
6.9% from 7.9% in September, although a 638,000 increase in
nonfarm payrolls was the smallest gain since a jobs recovery
started in May. 
    "It raises prospects for fourth quarter growth," said 
Michael Englund, chief economist at Action Economics in Boulder,
Colorado. "It's clearly a good sign for the economy, so it would
put upward pressure on yields."
    On the election front, Biden took a narrow lead over
Republican President Donald Trump in Georgia and Pennsylvania on
Friday, putting the White House within his reach as vote counts
continued in a handful of undecided states.
    Yields have been on a roller-coaster ride this week. The
market, which had positioned for a Democratic sweep in Tuesday's
national elections, has recalibrated for a split government
scenario that would likely result in a smaller stimulus plan to
aid the coronavirus-battered economy, although potential runoffs
in Georgia could determine which party controls the U.S. Senate.

    The coming week will bring a burst of supply with $54
billion of three-year notes offered on Monday, $41 billion of
10-year notes on Tuesday and $27 billion of 30-year bonds on
Thursday. 
    Jim Caron, portfolio manager at Morgan Stanley Investment
Management, said it was hard to see bond yields move materially
higher.
     "As more supply comes into the market, if you can buy
things a little bit cheap, you're going to do it," he said.
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes steepened. It was last up 5.6 basis points
at 67.20 basis points. It had widened to as much as 77 basis
points on Wednesday. 
    November 6 Friday 10:13AM New York / 1613 GMT
                               Price Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.0925       0.0938    0.003
 Six-month bills               0.0975       0.0989    0.003
 Two-year note                 99-240/256   0.1567    0.006
 Three-year note               99-196/256   0.2052    0.013
 Five-year note                99-104/256   0.3705    0.035
 Seven-year note               99-68/256    0.6077    0.049
 10-year note                  98-20/256    0.8303    0.052
 20-year bond                  95-164/256   1.3777    0.061
 30-year bond                  94-120/256   1.6096    0.065
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         8.00        -0.25    
 spread                                               
 U.S. 3-year dollar swap         7.75         0.00    
 spread                                               
 U.S. 5-year dollar swap         6.25        -0.50    
 spread                                               
 U.S. 10-year dollar swap        2.25        -0.50    
 spread                                               
 U.S. 30-year dollar swap      -33.25        -0.75    
 spread (Reporting by Karen Pierog in Chicago and Dhara Ranasinghe in
London; Editing by Catherine Evans and Jonathan Oatis)
  
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