* New jobless claims rise to three-month high
* Market awaits Friday's U.S. payrolls report
By Ellen Freilich
NEW YORK, April 4 U.S. Treasury debt prices rose
on Thursday, pushing yields to near 3-1/2-month lows, after data
on new jobless claims suggested key government employment data
due Friday could show the labor market lost some steam in March,
an outcome that would favor safe-haven U.S. debt.
The number of Americans filing new claims for unemployment
benefits rose 28,000 to a seasonally adjusted 385,000, the
highest level since November, the U.S. Labor Department said. It
was the third straight week of gains in claims.
The benchmark 10-year Treasury note, up 7/32 in
price before the jobless claims report, was up 12/32 immediately
afterwards. Its yield stood at 1.77 percent, after dipping
nearer a 3-1/2-month low. The 30-year Treasury bond
rose 26/32 as its yield eased to 3.01 percent.
Technical resistance and profit-taking before Friday's
payrolls report subsequently trimmed some of those gains.
The U.S. Labor Department tied some of the volatility in
claims to holidays and spring breaks falling in March.
Still, there were enough jitters to drive a safe-haven bid
April will be a very important month for jobs. That's when
most people expect the impact from the government sequester will
"The BOJ move was a healthy surprise," said Robbert Van
Batenburg, director of market strategy at Newedge USA LLC in New
York, referring to the Bank of Japan's decision to inject $1.4
trillion into the economy in less than two years, a move that
sent Japanese bond yields to record lows.
"But that was deflated by the (U.S.) jobless claims (jump)
and the passive mode of the ECB," he said. The European Central
Bank on Thursday held rates steady, taking a wait-and-see stance
toward the euro zone recession.
"The 10-year Treasury yield is dropping to its lowest level
of the year and the euro is falling out of bed. There is a lot
of nervousness in the system," Batenburg said.
Below-forecast ADP private payrolls data and
non-manufacturing employment component released on Wednesday had
already lowered expectations for the payroll growth investors
expect to see in this Friday's employment report.
The jump in new jobless claims reported on Thursday
reinforced those perceptions, allowing bond prices to rise and
yields to ease further.
"The 385,000 new claims don't look good," said Chris Rupkey,
managing director and chief financial economist at Bank of
Tokyo-Mitsubishi UFJ. "Is it Easter or something more? If it is
temporary that is one thing, but you can bet your bottom dollar
that nothing good has ever happened to the economy when
unemployment claims are rising."
Analysts said concerns about second-quarter U.S. growth
supported bond prices.
"Economic growth has had a soft patch around this time of
year for three straight years," Rupkey said.
"The big show is tomorrow's employment report for March," he
said. "There is evidence that the economy is going to slow in
the second quarter again this year as the European economy is
weak and the mandatory spending cuts from Washington start to
have a greater impact."
That could keep the Fed buying Treasuries and nudge U.S.
Treasury yields still lower, strategists said.