TREASURIES-Prices gain as US jobs gains solid, European debt yields plunge

Fri Jun 6, 2014 9:07am EDT

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* Treasuries prices gain as jobs data meets expectations
    * European debt yields fall to record lows
    * US debt seen attractive relative to Spanish, Italian bonds

    By Karen Brettell
    NEW YORK, June 6 (Reuters) - U.S. Treasuries prices gained
on Friday after data showed that U.S. employers maintained a
solid pace of hiring in May, with job additions coming in as
economists expected, and as falling yields on European bonds
made U.S. debt relatively attractive.
    Nonfarm payrolls increased 217,000 last month, the Labor
Department said on Friday, returning employment to its
pre-recession level and offering confirmation the economy has
snapped back from a winter slump. Economists polled by Reuters
had expected employment to increase 218,000 last month.
    The unemployment rate held steady at a 5-1/2 year low of 6.3
percent even as some Americans who had given up the search for
work resumed the hunt. That was because there was an increase in
household employment. 
    "The numbers across the board came in very much as
expected," said Dan Mulholland, managing director in Treasuries
trading at BNY Mellon in New York.
    Benchmark 10-year notes were last up 9/32 in
price to yield 2.55 percent, down from 2.58 percent late on
Thursday.
    Treasuries were also favored as Italian, Spanish and Irish
bond yields fell to record lows, a day after the European
Central Bank cut all its main rates to record lows, imposed
negative interest rates on overnight bank deposits and outlined
a new long-term loan program for banks to promote lending to
small and mid-sized businesses. 
    The rally in European debt pushed yields on Italian and
Spanish debt closer to those offered by Treasuries, which are
considered a much lower risk, making the U.S. bonds more
attractive by comparison.
    "It's going to be hard for the Treasury market to selloff a
whole lot given where peripheral European debt is at the
moment," said Mulholland.
    Ten-year Spanish bond yields fell to 2.62
percent, and Italian bond yields dropped to 2.73
percent. Irish government bonds paid less than
comparable Treasuries for a second day, with 10-year yields
dropping to 2.43 percent.
    

 (Editing by W Simon)
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