* U.S. jobless claims rise more than expected
* U.S. trade deficit widens on weak exports
* Traders eye Friday's U.S. employment report
(Updates prices, adds analyst comments)
By Sam Forgione
NEW YORK, April 3 Longer-dated U.S. Treasuries
yields edged lower on Thursday after data showed U.S. initial
jobless claims rose more than expected last week, causing some
jitters ahead of the monthly labor market report due on Friday
and spurring a safety bid.
The Labor Department said initial claims for unemployment
benefits increased 16,000 to a seasonally adjusted 326,000 in
the week ended March 29, exceeding economists' expectations of a
rise to 317,000.
The data worried investors ahead of the government's closely
watched employment report, which economists expect will show
nonfarm payrolls increased by 200,000 jobs in March after rising
by 175,000 in February. The unemployment rate is seen falling
one-tenth of a percentage point to 6.6 percent.
A 200,000 increase in nonfarm payrolls would be the highest
in four months.
Separately on Thursday, the Commerce Department said the
trade gap increased 7.7 percent to $42.3 billion in February,
the largest gap since September, as exports fell to their lowest
level in five months. The data contributed to the slight dip in
the long-dated bond yields.
The jobless claims and trade balance data pushed
longer-dated bond yields slightly lower, said Vishal Khanduja,
fixed income portfolio manager at Calvert Investments in
The 30-year Treasury bond rose 14/32 in price to
yield 3.62 percent, compared to a yield of 3.65 percent late on
Wednesday. The benchmark 10-year U.S. Treasury note
was roughly unchanged to yield 2.79 percent.
Thursday's dip in long-term bond yields marked a turn in
sentiment from the past week. Through Wednesday, the 30-year
Treasury yield had risen about 14 basis points since March 27,
partly on upbeat economic data and expectations that Friday's
jobs report would be strong.
"The market had basically factored in a pretty good report,
and there was a rethinking of that view," said Anthony Valeri,
fixed income strategist at Boston-based LPL Financial.
Long-dated Treasuries yields edged lower despite data
showing growth in the U.S. services sector accelerated in March.
The Institute for Supply Management said its services sector
index rose to 53.1 last month, slightly under expectations for a
read of 53.5 but comfortably ahead of the February read of 51.6.
"There were probably investors looking for a stronger bounce
back from February," Valeri said of the muted impact on
Traders will be watching Friday's employment report for
signs of a better economic outlook after cold weather put a
chill on the economy at the start of the year, and also for
hints on the likely path of the U.S. Federal Reserve's monetary
policies. On March 19, Fed Chair Janet Yellen suggested the
central bank could raise interest rates earlier than expected.
The Fed bought $1.08 billion in Treasuries maturing between
August 2040 and February 2043 on Thursday as part of its ongoing
purchases, which had a little impact on Treasuries yields.
Stocks on Wall Street fell, led by a sharp drop in biotech
and momentum stocks. The benchmark Standard & Poor's 500
index was last down 0.12 percent. The decline came after the S&P
500 and the Dow Jones industrial average earlier hit
record intraday highs.
(Reporting by Sam Forgione; Editing by Paul Simao and Leslie