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TREASURIES-U.S. yields hit 2-week highs as U.S. jobs growth picks up

Richard Leong

* U.S. hiring accelerates in March but wage growth slows

* Trump said U.S.-China trade deal possible in four weeks

* U.S. to sell $78 bln in 3-, 10-, 30-year debt next week

(Updates market action, adds quote, graphic) NEW YORK, April 5 (Reuters) - U.S. Treasury yields were little changed on Friday, after hitting a two-week high as the government reported that domestic hiring rebounded from a 17-month low in March, offset by a moderation in wage growth. U.S. employers added 196,000 workers last month, more than a revised 33,000 in February, while average hourly earnings grew a mere 0.1% following a 0.4% jump the month before. The latest snapshot of the U.S. labor market allayed concerns about a recession and reinforced the view that inflation remains muted and the Federal Reserve will likely refrain from raising interest rates in 2019, analysts said. "Okay headline, bad details. Don't think it changes the basic thesis," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia. Earlier Friday, bond yields had risen on optimism that China and the United States may sign a trade pact soon, a development that would reduce the safe-haven demand for Treasuries. President Donald Trump said on Thursday the two countries were close to a deal that could be announced within four weeks, while warning Beijing that it would be difficult to allow trade to continue without a pact. At 9:49 a.m. (1349 GMT), the yield on benchmark 10-year Treasury notes was 2.5079%, little changed from late on Thursday. It hit a two-week high of 2.544% shortly after the release of the March jobs report. Interest rate futures implied traders see a 56% chance the Fed will lower key lending rates by a quarter point in early 2020, down from 60% late on Thursday, according to CME Group's FedWatch program. On the supply front, the U.S. Treasury Department said it will sell a combined $78 billion in three-, 10- and 30-year bonds next week.

April 5 Friday 9:56 AM New York / 1356 GMT Price

US T BONDS JUN9 147-26/32 4/3210YR TNotes JUN9 123-144/256 1/32Price Current NetYield % Change

(bps)

Three-month bills 2.3825 2.4297 -0.004Six-month bills 2.39 2.4589 0.005Two-year note 99-208/256 2.3474 0.008Three-year note 100-54/256 2.3 0.005Five-year note 99-24/256 2.3187 0.002Seven-year note 99 2.4065 -0.00210-year note 101-4/256 2.5079 -0.00230-year bond 101-180/256 2.9141 -0.005YIELD CURVE Last (bps) Net

Change (bps)

10-year vs 2-year yield 15.90 -1.7030-year vs 5-year yield 59.40 -0.45

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 10.50 0.00

spread

U.S. 3-year dollar swap 8.00 0.50

spread

U.S. 5-year dollar swap 4.00 0.00

spread

U.S. 10-year dollar swap -2.00 0.00

spread

U.S. 30-year dollar swap -24.75 0.25

spread

(Reporting by Richard Leong)