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CORRECTED-TREASURIES-Most U.S. yields rise as jobs data keeps hawkish policy bets alive

bets alive@ (Corrects 8th paragraph to say 10-year Bund yields hit 18-month high, instead of six-month high)

* U.S. nonfarm payrolls jumped by 222,000 jobs in June

* Yields initially fall before most turn higher on day

* 10-year yield hits more than 8-week high

* 2-,3- yr yields stable to lower on U.S. wage, unemployment data

NEW YORK, July 7 (Reuters) - Most U.S. Treasury yields rose on Friday, with longer-dated yields briefly hitting multi-week highs, after mixed details of a U.S. June employment report did not derail expectations of tighter global central bank monetary policy. Trading was choppy in the Treasury market after the U.S. jobs data, with yields initially tumbling and then quickly reversing course. Longer- and medium-dated yields were last higher on the day, while shorter-dated yields were stable to slightly lower but remained high on a historical basis. Nonfarm payrolls jumped by 222,000 jobs, the U.S. Labor Department said, beating economists' expectations for a gain of 179,000. While the unemployment rate rose to 4.4 percent from 4.3 percent in May, that was because more people were looking for work, a sign of confidence in the labor market. While sluggish wage growth put a wrinkle in the otherwise upbeat report and signaled lagging inflation, analysts said the report did not alter expectations that the Federal Reserve would raise interest rates again later this year and begin unwinding its balance sheet. With a hawkish Fed still in place, most yields resumed the uptrend they began last week on anticipation that the Fed would tighten monetary policy roughly in unison with the European Central Bank and Bank of England, whose chiefs made suggestions last week that they were shifting toward less accommodative policy. "(The U.S. bond market) is not massively altering its course based on this report," said Shyam Rajan, head of U.S. Rates Strategy at Bank of America Merrill Lynch in New York. "I do think strongly that well go back to being driven by Europe. Benchmark 10-year Treasury yields hit a more than eight-week high of 2.396 percent and 30-year yields hit a more than six-week high of 2.943 percent after the U.S. jobs data. Treasury yields were moving in tandem with rising yields in Europe, with 10-year Bund yields hitting an 18-month high on Friday of 0.58 percent. Analysts attributed the stable to slightly lower status of shorter-dated yields to the disappointing aspects of the U.S. jobs report. U.S. two-year yields were last at 1.403 percent, from 1.406 percent late Thursday. "The initial dip in rates was a function of the small increase in the earnings number and the uptick in the unemployment rate," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco. July 7 Friday 10:48AM New York / 1448 GMT Price

US T BONDS SEP7 151-29/32 -0-12/32 10YR TNotes SEP7 124-236/256 -0-16/25

6

Price Current Net Yield % Change

(bps)

Three-month bills 1.0225 1.0393 0.005 Six-month bills 1.1225 1.1444 -0.001 Two-year note 99-180/256 1.4031 -0.003 Three-year note 99-190/256 1.5902 -0.003 Five-year note 99-18/256 1.947 0.005 Seven-year note 98-156/256 2.2163 0.010 10-year note 99-240/256 2.382 0.013 30-year bond 101-112/256 2.9273 0.023

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 25.00 -0.25

spread

U.S. 3-year dollar swap 21.00 0.50

spread

U.S. 5-year dollar swap 7.50 0.00

spread

U.S. 10-year dollar swap -3.25 -0.75

spread

U.S. 30-year dollar swap -31.50 -2.00

spread