Wires

TREASURIES-Yields rise on reports of coronavirus treatment, job gains

Ross Kerber

(Updates with market activity, analyst comment) BOSTON, Feb 5 (Reuters) - U.S Treasury yields rose on Wednesday as traders reacted to positive reports on efforts to counter the coronavirus and a strong private-sector jobs report. The benchmark 10-year yield was up 4.5 basis points in afternoon trading at 1.6456%. Other markets also responded to early reports that a Chinese university team found a drug to treat virus victims and to UK researchers saying they made a "significant breakthrough" in finding a vaccine. The World Health Organization played down reports of breakthrough drugs, and set a conference in Geneva next week to plan research and development priorities to combat the outbreak. "There are no proven effective therapeutics for novel coronavirus," Dr. Mike Ryan, executive director of WHO emergencies program, told a news conference. Market analysts said traders nonetheless seem to expect authorities would successfully limit the epidemic. "Risks around the virus remain, but it looks like China is doing a lot to contain the virus and that is what is leading to the optimism in risky assets," said Subadra Rajappa, head of U.S. rates strategy for Societe Generale. She and others cautioned that traders' risk appetite could be coming too soon, before more is known about the epidemic's economic impact. "There might be some bad news that could play out here," said Tom di Galoma, managing director of Seaport Global Holdings. China said another 65 people had died as of Tuesday, the highest daily total yet, taking the overall toll on the mainland to 490, most in and around the locked-down central city of Wuhan, where the new virus emerged late last year. There have been two deaths outside mainland China - in the Philippines and Hong Kong - both following visits to Wuhan. Separately U.S. private-sector payrolls rose by 291,000 jobs in January, ADP reported on Wednesday, nearly double a forecast and the highest increase since May 2015. In addition data from the Institute for Supply Management showed U.S. services sector activity picked up in January following an upbeat manufacturing report this week. The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, was up 2.6 basis points at 1.4411% in afternoon trading.

February 5 Wednesday 2:07PM New York / 1907 GMT

Price Current NetYield % Change

(bps)

Three-month bills 1.53 1.5615 -0.013Six-month bills 1.53 1.5676 0.003Two-year note 99-223/256 1.4411 0.026Three-year note 100-48/256 1.4345 0.033Five-year note 99-154/256 1.4582 0.036Seven-year note 99-148/256 1.564 0.04010-year note 100-240/256 1.6456 0.04530-year bond 105-84/256 2.1323 0.052

DOLLAR SWAP SPREADS

Last (bps) Net

Change (bps)

U.S. 2-year dollar swap 6.00 -0.25

spread

U.S. 3-year dollar swap 2.25 -0.25

spread

U.S. 5-year dollar swap 0.50 0.25

spread

U.S. 10-year dollar swap -4.50 0.25

spread

U.S. 30-year dollar swap -32.50 0.25

spread

(Reporting by Ross Kerber; editing by Jonathan Oatis and Nick Zieminski)