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TREASURIES-Yields jump, then retreat after U.S. private payroll data

* U.S. private employers added 253,000 jobs in May

* 3-,2-year yields hit at least one-week highs

* Friday U.S. non-farm payrolls data eyed

NEW YORK, June 1 (Reuters) - U.S. short-dated Treasury yields briefly touched at least one-week highs on Thursday after strong U.S. private payroll data marginally boosted expectations for more Federal Reserve interest rate increases in 2017, while caution ahead of Friday's jobs report limited the move. The ADP National Employment Report showed U.S. private employers added 253,000 jobs in May, above estimates of 185,000 from economists surveyed by Reuters. The data reinforced expectations for a Fed rate hike at the end of the central bank's June 13-14 meeting and may have marginally boosted views that a September increase is still possible, analysts said. That helped push up short-dated yields, which are considered more vulnerable to Fed actions. The ADP figures come ahead of the U.S. Labor Department's more comprehensive non-farm payrolls report on Friday, which includes both public and private-sector employment. Economists expect total non-farm employment to show an increase of 185,000 jobs. The ADP data pushed yields on Treasuries maturing between two and 30 years to session highs. Three-year yields hit a one-week high of 1.465 percent, and the two-year's reached an eight-day peak of 1.314 percent. "Even if ADP is off by, say, 60,000, the payrolls would be 180,000-ish, and thats definitely consistent with a Fed hike in June," said John Herrmann, director of interest rates strategy at MUFG Securities in New York. "We think its consistent with continued progress in the economy and possibly a hike in September." The move was brief, however. Yields soon stabilized and were last standing just slightly higher on the day and roughly at levels before the ADP report as caution prevailed ahead of the U.S. May non-farm payrolls report and on U.S. political uncertainty. "Theres still a lot of potential distress for the markets," said Kim Rupert, managing director for fixed income at Action Economics in San Francisco. She cited uncertainty over U.S. politics, including what U.S. President Donald Trump will say later on Thursday about the Paris accord to fight climate change. Analysts also said the conclusion of month-end buying that was propping up Treasuries prices in recent sessions had removed a pillar of support from the market and helped yields edge higher. Benchmark 10-year Treasuries were last down 6/32 in price, with the yield rising to 2.218 percent from 2.198 percent late on Wednesday. Yields briefly hit a session high of 2.239 percent after the ADP report.

June 1 Thursday 11:14AM New York / 1514 GMT Price

US T BONDS JUN7 154-27/32 -0-9/32 10YR TNotes JUN7 126-112/256 -0-32/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 0.96 0.9757 -0.002 Six-month bills 1.055 1.0754 0.002 Two-year note 99-232/256 1.2977 0.020 Three-year note 100-40/256 1.4456 0.017 Five-year note 99-240/256 1.7631 0.015 Seven-year note 99-212/256 2.0265 0.014 10-year note 101-104/256 2.2167 0.019 30-year bond 102-136/256 2.8733 0.016

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 22.50 0.00

spread

U.S. 3-year dollar swap 20.25 0.00

spread

U.S. 5-year dollar swap 7.50 0.00

spread

U.S. 10-year dollar swap -6.25 0.00

spread

U.S. 30-year dollar swap -44.50 -0.25

spread

(Reporting by Sam Forgione; Editing by Lisa Von Ahn)