December 6, 2019 / 2:40 PM / 2 months ago

UPDATE 2-U.S. Treasury yields jump after non-farm payrolls rise

 (Updates market activity and adds analyst comment)
    By Ross Kerber and Arjun Panchadar
    BOSTON/BENGALURU, Dec 6 (Reuters) - U.S. Treasury yields
rose on Friday after the Labor Department reported job growth
increased by the most in 10 months in November.
    The benchmark 10-year yield was 4 basis points
higher at 1.8346% in late morning trading, reflecting greater
investor appetite for risk.
    Analysts said the jobs report showed an underlying strength
in the U.S. economy that offset a series of mixed signals from
other reports earlier in the week. U.S. stocks also
advanced.
    "Basically the market is very positive on this news because
what it does is, it confirms a strong economy even though we
have seen a little weakness come in," said Andre Bakhos,
managing director at New Vines Capital LLC in Bernardsville, New
Jersey.
    "This is going to throw a wrench into the argument that the
economy is slowing down. Companies don't hire if the economy is
slowing down, companies go the other way," Bakhos said.
    The Labor Department's closely watched monthly employment
report showed steady wage gains and the unemployment rate
falling back to 3.5%. It was seen as validating the U.S. Federal
Reserve's decision last month to cut interest rates for the
third time this year but to signal a pause in its easing cycle.
    The 10-year yield rose as much as 6.9 basis points earlier
on Friday after the jobs report. The retrenchment may have
reflected a cooler view that the report could have shown strong
seasonal-but-temporary hiring, or be subject to downward
revisions later, said Guy LeBas, chief fixed income strategist
at Janney Montgomery Scott.
    "The forward-looking implications of today's labor report
were not many," he said.
    The two-year yield, which typically moves in step with
interest rate expectations, was up 3.3 basis points to 1.6149%
on Friday morning.
      December 6 Friday 11:14AM New York / 1614 GMT
                               Price                  
                                                      
                                                      
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.5          1.5305    -0.015
 Six-month bills               1.5175       1.5545    0.002
 Two-year note                 99-199/256   1.6149    0.033
 Three-year note               99-250/256   1.6331    0.038
 Five-year note                99-56/256    1.6642    0.044
 Seven-year note               99-8/256     1.7732    0.045
 10-year note                  99-60/256    1.8346    0.040
 30-year bond                  102-60/256   2.2717    0.027
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         1.50         0.00    
 spread                                               
 U.S. 3-year dollar swap        -2.50         0.00    
 spread                                               
 U.S. 5-year dollar swap        -3.50        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -7.25         0.00    
 spread                                               
 U.S. 30-year dollar swap      -33.00         0.75    
 spread                                               
 
 (Reporting by Ross Kerber in Boston; additional reporting by
Arjun Panchadar in Bengaluru;
Editing by Chizu Nomiyama and Jonathan Oatis)
  
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