December 7, 2017 / 2:45 PM / 11 days ago

TREASURIES-Yields steady ahead of Friday jobs report

NEW YORK, Dec 7 (Reuters) - U.S. Treasury yields were little changed on Thursday, shrugging off a report on U.S. unemployment as investors held off on major moves ahead of the all-important nonfarm payrolls report expected Friday.

Investors also are looking toward the conclusion of the Federal Reserve’s policy meeting next week. An increase of U.S. overnight interest rates to 1.25 - 1.50 percent is already priced into Treasuries, analysts say, with Fed funds futures showing that 100 percent of the market expects a rate hike.

The number of Americans filing for unemployment benefits unexpectedly fell last week to 236,000, data showed, but that had little impact on the market as bond traders are keen to examine the details in the Labor Department’s Friday release.

In addition to the Fed’s meeting, the U.S. Treasury will be holding auctions of government debt next week.

“We’ll watch for headlines, anything on the debt ceiling but right now it feels like it’s just going to be a little bit of choppy trade,” said Justin Lederer, Treasury analyst at Cantor Fitzgerald. “It is December, books are starting to get closed and people are looking toward next week and obviously the end of the year.”

The yield curve tightened marginally, with longer dated yields inching lower, returning to a theme that has peppered the week. The difference between yield on 2- and 10-year notes touched a fresh 10-year low on Wednesday before retracing the move. The spread was lower Thursday, at 52.3 basis points, hovering just above Wednesday’s low of 50.3 basis points.

Benchmark U.S. 10-year Treasury notes were flat, yielding 2.33 percent.

U.S. 2-year notes were also little moved from their late Wednesday levels at 1.81 percent.

Yields fell across the board on Wednesday with analysts comparing the market’s thirst for fresh news to “a junkie, waiting for the next fix” as risk appetite slid after a global sell-off in equities.

“All the good news seems to have been priced in: the U.S. tax reform, the Federal Reserve hike next month and next year,” Bruno Braizinha, interest rates strategist at Societe Generale, told Reuters. “So now the market is waiting for the next positive thing.” (Reporting by Dion Rabouin; Editing by Bernadette Baum)

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