US 30-, 10-year yields rise from record lows on jobs data

By Sam Forgione

NEW YORK, Jul 7 : U.S. Treasury yields rose on Thursday, with benchmark and long-dated yields up from record lows hit Wednesday, after stronger-than-expected U.S. jobs data led traders to trim bets on safe-haven Treasuries one day ahead of a key June employment report.

The ADP National Employment Report showed private employers hired 172,000 workers in June, beating market expectations for a 159,000 gain. Separately, the Labor Department said initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 254,000 for the week ended July 2.

The drop left claims close to a 43-year low of 248,000 touched in mid-April.

The jobs data came ahead of the government’s more comprehensive employment report for June due out on Friday.

Economists polled by Reuters expect U.S. employers to have added 175,000 jobs last month after adding just 38,000 in May.

While analysts said Friday’s jobs data likely would not sway the Federal Reserve to hike interest rates this year, given global growth concerns stemming from Britain’s June 23 vote to exit the European Union, they said traders still reduced bullish bets on Treasuries since the jobs data could cause volatility in Treasuries prices.

“Given the broader global concerns, it’s unlikely even a strong jobs report would bring the Fed back into play in the short term,” said Jonathan Lewis, chief investment officer at Fiera Capital Inc in New York. “An argument can be made that, even with the Fed not in play, Treasuries are richly valued.” “It would be very natural to reduce positions in Treasuries ahead of tomorrow’s number,” he added.

While yields were higher on the day, they were still not far from lows touched Wednesday, with lingering global growth concerns and higher interest rates in the United States compared to other countries limiting the rise.

U.S. 30-year Treasuries were last down 10/32 in price to yield 2.165 percent after hitting a record low of 2.098 percent on Wednesday. Benchmark 10-year Treasuries were last down 10/32 in price to yield 1.420 percent after touching a record low of 1.321 percent Wednesday.

U.S. two- and three-year yields hit one-week highs of 0.617 percent and 0.716 percent, respectively, after hitting their lowest levels in 1-1/2 weeks on Wednesday.

Trading was calmer Thursday, with volumes low as many were in a wait-and-see mode ahead of Friday’s jobs figure, said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.

July 7 Thursday 10:40AM New York / 1440 GMT Price

US T BONDS SEP6

175-13/32 -0.46875 10YR TNotes SEP6 133-96/256 -0.296875

Price

Current Net Change Yield % bps Three-month bills 0.2775

0.2815 0.011

Six-month bills

0.355

0.3616 0.012

Two-year note

100-6/256 0.6131 0.028 Three-year note 100-122/256 0.7107 0.030

Five-year note

100-164/256 0.9928 0.031

Seven-year note

100-224/256 1.2437 0.033

10-year note

101-228/256 1.4187 0.034

30-year bond

107-84/256 2.1654 0.013

DOLLAR SWAP SPREADS

Last bps Net Change bps

U.S. 2-year dollar swap 16.00 -0.25 spread

U.S. 3-year dollar swap 12.50 -0.50 spread

U.S. 5-year dollar swap -1.50 -0.25 spread

U.S. 10-year dollar swap -10.25 -0.50 spread

U.S. 30-year dollar swap -42.25 -0.25 spread

/Reuters

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