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TREASURIES-Yields up on payrolls positioning, no ECB easing hint

Reuters. Some traders are anticipating a slightly lower
Thursday, 6 Feb 2014 | 9:48 AM ET

* Yields rise with German bunds as Draghi upbeat on eurozone

* Traders positions for moderate jobs gains in Friday's payrolls report

* Fed to buy $1 bln-$1.25 bln bonds due 2036-2043

NEW YORK, Feb 6 (Reuters) - U.S. Treasuries yields edged up on Thursday in choppy trading after European Central Bank President Mario Draghi gave no hint of imminent monetary policy easing in initial remarks after holding rates steady, and as investors positioned for Friday's highly anticipated jobs report for January. The ECB left interest rates unchanged on Thursday, as was expected by economists, holding off fresh policy action to combat the threat of deflation while it waits for new staff forecasts next month. Treasuries followed German government bonds, which had bouts of selling on Draghi's cautiously upbeat comments on the economy, though the ECB President's comments were not seen as departing from his previous position. "So far he's stayed in line with previous comments, he expects a period of low inflation, he is ready to act if need be, and he sees the recovery as moderate," said Jason Rogan, managing director in Treasuries trading at Guggenheim Partners in New York. At the same time investors were cautious heading into Friday's jobs report, which economists expect to show solid jobs gains despite a recent bout of worsening economic data and a surprisingly weak jobs report in December. Employers are expected to have added 185,000 jobs in the month, according to the median estimate of 101 economists polled number of jobs additions, of around 160,000 - 170,000. The number of Americans filing new claims for unemployment benefits fell more than expected last week, in a boost to the labor market outlook and the broader economy, data showed on Thursday. Other data showed a weakening in exports in December, which if it extends to January could see trade being a drag on growth in the first quarter after it helped to buoy the economy in the last three months of 2013. Benchmark 10-year Treasuries yields were last down 6/32 in price to yield 2.69 percent. The yields have dropped from more than 3 percent at the beginning of the year and traded as low as 2.57 percent on Monday, the lowest since Nov. 1. Treasuries yields have been pulled down in the past month as weakening data raises concerns over the strength of the economic recovery while fears over emerging market economies have led investors to flee their assets and buy safe haven U.S. government bonds. But traders expect yields could rise again if jobs and other data rebounds from their recent weakness, keeping the Federal Reserve on track to reduce the size of its monthly bond purchases, and if volatility in emerging markets ebbs. The Fed last week cut its monthly bond purchases by $10 billion, to $65 billion and is expected to continue reducing the size in $10 billion increments. "You're going to continue to see a battle between the EM flight-to-quality concerns and the fact that the Fed, which has been the biggest buyer of treasuries and mortgages in the worlds, are slowly but surely reducing what they are buying," said Rogan. The Fed will buy between $1.00 billion and $1.25 billion in bonds due 2036 to 2043 on Thursday as part of its ongoing purchases.