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TREASURIES-Bonds ease despite jump in August unemployment
* US Treasury yields end up despite jobs data
* Benchmark yields set for biggest weekly drop since June
* Yield rises limited by worries about financial sector (Adds strategist quote, updates prices)
By Chris Reese
NEW YORK, Sept 5 (Reuters) - U.S. Treasury debt prices ended lower on Friday, despite a jump in the unemployment rate, after the need for a safe-haven abated as U.S. stocks recovered from a test of their two and half year lows seen in July.
Benchmark U.S. Treasury prices initially rose in price, as U.S. stocks fell, following news that the U.S. economy shed jobs for the eighth month in a row in August, with the unemployment rate climbing to 6.1 percent, the highest in nearly five years. For details see [ID:nN05501018].
But after seeing the lowest yields in more than four months this week, U.S. Treasury prices fell early Friday, as U.S. stocks bounced from a test of the lows seen in July.
"It is your classic buy the rumor, sell the fact," said John Spinello, Treasury bond strategist at Jefferies & Co. in New York.
The benchmark 10-year note US10YT=RR ended 9/32 lower in price for a yield of 3.66 percent from 3.63 percent late on Thursday.
Despite the fall in prices on Friday, U.S. benchmark yields still saw their biggest weekly drop since late June.
"If you look at it in the context of the price action this week ... people were expecting a weak payrolls number, and they priced most of it in," said David Ader, head of government bond strategy for RBS Greenwich Capital in Greenwich, Connecticut.
Two-year Treasuries US2YT=RR fell 4/32 for a yield of 2.25 percent from 2.196 percent late on Thursday.
But the weak U.S. economic recovery and ongoing concerns about the health of the financial sector were seen likely to keep yields from rising further.
Last Friday, U.S. regulators took over Integrity Bank, making it the 10th bank to fail this year as the slump in the U.S. housing market continues to impact the balance sheets of financial firms.
Five-year notes US5YT=RR traded 9/32 lower in price for a yield of 2.92 percent from 2.86 percent late on Thursday, while 30-year bonds traded US30YT=RR 5/32 lower in price for a yield of 4.27 percent. (Reporting by Chris Reese)
