TREASURIES-Bond yields rise, traders eye Friday jobs report

Mon Mar 31, 2014 11:31am EDT

Related Topics

* 30-yr Treasury bond price falls 1 pct

* Traders expect strong Friday jobs report

* Trader expect hawkish Fed despite dovish Yellen comments

By Sam Forgione

NEW YORK, March 31 (Reuters) - U.S. Treasuries yields rose on Monday on expectations that stronger U.S. jobs data would keep the Federal Reserve on track to raise interest rates earlier than expected.

The 30-year Treasury bond fell over 1 percentage point in price on expectations that Friday's employment report for March will be better-than-expected and bolster the hawkish tone that Fed Chair Janet Yellen took earlier this month at a press conference.

"We're in a relatively hawkish environment, and some investors may feel bonds are at an attractive level to short," said Jeffrey Young, U.S. interest rate strategist at Nomura Securities International in New York.

Treasuries yields were higher despite more dovish comments from Yellen on Monday, including that the Fed's "extraordinary" commitment to boosting the economy will be needed for some time to come.

Yellen said earlier this month that the Fed could start raising interest rates six months after the U.S. central bank ends its current monthly bond-buying program, which caused selling pressure on Treasuries, especially short-and intermediate-dated notes.

Traders said that recent strong U.S. economic data on consumer confidence, durable goods orders, and weekly jobless claims point to an improving U.S. economic picture after frigid temperatures hurt data at the start of the year.

"What's gnawing at Treasuries is this belief or fear that the economic data is going to potentially improve, and maybe significantly so, in the next couple of months as we work through the weather impact," said William O'Donnell, head U.S. Treasury strategist at RBS Securities in Stamford, Connecticut.

Treasuries yields rose despite data on Monday showing the pace of business activity in the U.S. Midwest fell more than expected in March to its lowest level since August.

The Institute for Supply Management-Chicago business barometer was 55.9, down from 59.8 in February. Economists' median forecast in a Reuters poll was 59.0.

The benchmark 10-year U.S. Treasury note was last down 9/32 in price to yield 2.75 percent. The yield on the note was at 2.71 percent late Friday.

The 30-year bond was last down 20/32 in price to yield 3.57 percent. The yield on the bond was at 3.54 percent last Friday. (Reporting by Sam Forgione; editing by Andrew Hay)

FILED UNDER: