TREASURIES-Robust jobs data intensifies U.S. bond market sell-off

* U.S. 10-year yield hits 4-year peak, 2-year highest since 2008

* Year-over-year U.S. wage growth strongest since 2009

* U.S. 2-year, 10-year part of yield curve steepest since November

(Updates market action, adds quote) NEW YORK, Feb 2 (Reuters) - A strong payrolls report on Friday raised concerns the Federal Reserve might hasten to increase interest rates to stem inflation, compounding a bond market rout that pushed the yield on the U.S. 10-year Treasury to a four-year high. Global bond yields have been rising on expectations of improving global growth and speculation on reduced stimulus from overseas central banks. While traders appear more upbeat on economic prospects outside the United States, domestic business activities have remained solid with signs inflation is edging closer to the Fed's 2 percent target. Some Fed officials have been reluctant to raise rates further without evidence of an acceleration in inflation. The Labor Department said on Friday employers hired 200,000 workers last month, more than the 160,000 they added in December. More importantly, average hourly earnings grew 0.3 percent, bringing its year-over-year increase to 2.9 percent, the biggest annual rise since June 2009. "This supports the notion of growing wage pressure in a tightening labor market," said Bill Northey, chief investment officer at the private client group of U.S. Bank in Helena, Montana. The encouraging wage figure lifted a gauge of investor expectations on inflation to its highest in almost 3-1/2 years. The yield premium on regular 10-year Treasury notes over 10-year Treasury Inflation Protected Securities grew to 2.13 percentage points, the most since September 2014, according to Reuters and Tradeweb data. As the inflation outlook has strengthened, traders have piled into bets the U.S. central bank would achieve at least three rate increases in 2018, matching the number put into place last year. The yield on the Benchmark 10-year Treasury reached a four-year peak at 2.852 percent. At 10:27 a.m. (1527 GMT), it was 2.841 percent, up 6.8 basis points on the day. The two-year yield touched a nine-plus year high at 2.186 percent, while the five-year yield hit 2.621 percent, its loftiest since April 2010. The yield curve further reversed its earlier flattening move tied to expectations that inflation would stay muted. The yield spread between two-year and 10-year Treasuries widened to 67 basis points, the most since mid-November after hitting a decade low nearly a month ago. February 2 Friday 10:28AM New York / 1528 GMT Price

US T BONDS MAR8 145-7/32 -1-11/32 10YR TNotes MAR8 120-192/256 -0-120/25


Price Current Net Yield % Change


Three-month bills 1.4625 1.4881 0.000 Six-month bills 1.6175 1.6532 0.005 Two-year note 99-170/256 2.1736 0.013 Three-year note 99-2/256 2.3508 0.034 Five-year note 98-232/256 2.6103 0.051 Seven-year note 98-68/256 2.7748 0.065 10-year note 94-252/256 2.8411 0.068 30-year bond 93-208/256 3.0684 0.062


Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 21.00 1.25


U.S. 3-year dollar swap 19.50 0.75


U.S. 5-year dollar swap 8.75 0.25


U.S. 10-year dollar swap 3.25 -0.25


U.S. 30-year dollar swap -12.50 0.00


(Reporting by Richard Leong; Editing by Steve Orlofsky)