TREASURIES-Yields rise in choppy trading after ECB cuts rates

Thu Jun 5, 2014 9:47am EDT

Related Topics

* Yields rise, 10-year notes back above 2.60 pct
    * US bond yields rise with German bunds after ECB cuts rates
    * US employment data for May in focus for Friday
    * Fed to buy $2.25 bln - $2.75 bln notes due 2021-2024

    By Karen Brettell
    NEW YORK, June 5 (Reuters) - U.S. Treasuries yields rose on
Thursday in choppy trading after the European Central Bank cut
interest rates to record lows and announced new measures meant
to help stimulate the region's economy.
    The cut, the first time the ECB has deployed a negative
deposit rate which effectively charges banks to deposit
overnight, was a response to a slowdown in inflation far below
the ECB's target and to weak euro zone lending. 
    The ECB added that it will offer banks a targeted long-term
refinancing operation (LTRO) to persuade them to lend, was
preparing to purchase asset-backed securities in future and will
discontinue sterilizing previous bond purchases. 
    Treasuries yields had fallen before the ECB announcement on
strong overnight demand for U.S. bonds from Japanese investors,
said traders.
    Benchmark 10-year notes were last up 1/32 in
price to yield 2.60 percent, up from 2.58 percent before the
ECB's decision.
    Treasuries yields rose in line with German government debt
yields, which jumped after the announcement.
    "It probably puts pressure on U.S. rates to the extent that
it's putting pressure on risk-free rates in Europe," said Chris
Diaz, a portfolio manager at Janus Global Bond Strategy in
Denver, Colorado.
    The next major focus for the market will be Friday's
payrolls report for May. It is expected to show that employers
added 218,000 people to payrolls, according to the median
estimate of 105 economists polled by Reuters. 
    The Federal Reserve will buy between $2.25 billion and $2.75
billion in notes due from 2021 to 2024 on Thursday as part of
its ongoing purchase program.
    

 (Additional reporting by Jonathan Spicer, Editing by W Simon)
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