TREASURIES-Prices fall as jobless data stirs optimism on economy

Thu Mar 7, 2013 3:44pm EST

Related Topics

* U.S. weekly jobless claims unexpectedly fall
    * U.S. forecast to have added 160,000 new jobs in February
    * Treasury next week to auction 3-year, 10-year, 30-year
bonds

    By Chris Reese
    NEW YORK, March 7 (Reuters) - 
    U.S. Treasuries prices fell for a fourth consecutive session
on Thursday as a surprise drop in jobless claims added to signs
of a strengthening labor market and raised hopes the world's
largest economy was gaining steam.
    The fall in weekly jobless claims came a day after data from
payrolls processor ADP showed unexpectedly strong hiring by
private employers last month, and boosted expectations for the
size of jobs growth in February payrolls data to be released on
Friday.
    "ADP was certainly strong enough that people are whispering
for a stronger (payrolls) figure, especially after jobless
claims," said Steve Van Order, fixed income strategist at
Calvert Investments in Bethesda, Maryland. "People are trying to
get themselves prepared for a possible surprise stronger labor
market report tomorrow."
    Benchmark 10-year notes traded 15/32 lower in
price to yield 1.991 percent, up from 1.936 percent late
Wednesday. Yields reached to as high as 1.997 percent, marking
the highest since Feb. 25.
    The number of Americans filing new claims for unemployment
benefits fell to a seasonally adjusted 340,000 last week, below
the median from analysts polled by Reuters for a reading of
355,000. 
    
 
     
    "This is not a sign of a slowly growing economy," said Chris
Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi
UFJ in New York. "This is not an economy that needs to be
strengthened by Federal Reserve policy four years after the
recession ended."
    Still, he said, "the bond market remains focused, to the
extent it trades at all with the 800 pound gorilla of Fed
(quantitative easing) on its back, on the unemployment rate."
    The government will release its closely watched monthly
report on the labor market on Friday. The median of forecasts
from analysts polled by Reuters was for the U.S. economy to have
added 160,000 new jobs last month, down from 157,000 new jobs in
January. 
    The unemployment rate is expected to remain unchanged from
January at 7.9 percent.
    The fall in claims for unemployment benefits in the latest
week bolstered stocks on Thursday, pushing the Dow to an
intraday record for a third session. 
    The February payrolls report on Friday is key because the
Federal Reserve has said it will keep interest rates near zero
until the unemployment rate falls to 6.5 percent, as long as
inflation does not threaten to top 2.5 percent.
    The Fed buying of $85 billion of mortgage-backed securities
and Treasuries per month has helped fuel global appetite for
riskier assets.
    Planned sales of U.S. government debt next week added to the
bearish tone in Treasuries on Thursday as investors pushed for
price concessions ahead of the auctions.
    The Treasury will sell $32 billion of three-year notes on
Tuesday, $21 billion of reopened 10-year notes on Wednesday and
$13 billion of reopened 30-year bonds on Thursday.
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