May 6, 2013 / 1:00 PM / 4 years ago

TREASURIES-U.S. bond yields at three-week highs before new supply

* Yields hold at higher levels after payrolls report
    * Treasury to sell $72 bln in new 3, 10, 30-year debt
    * Fed will buy $2.75 bln - $3.50 bln in debt due 2020-2023

    By Karen Brettell
    NEW YORK, May 6 (Reuters) - U.S. Treasuries prices slipped
slightly on Monday as investors continued to digest Friday's
better than expected jobs report, which sent yields surging to
their highest levels in three weeks.
    The U.S. government bonds are expected to stay at the
relatively higher yields as investors prepare for $72 billion in
new supply this week.
    Friday's jobs gains caught traders offside, as most were
anticipating a gloomier jobs picture after other economic
releases pointed towards more sluggish growth. 
    "There was a significant amount of buying and short covering
and capitulation around month-end and prior to that number, with
expectations having been lowered substantially going in," said
Dan Mulholland, managing director in Treasuries trading at BNY
Mellon in New York.
    The positive jobs surprise, with employers adding 165,000
jobs in April and the jobless rate falling to 7.5 percent, the
lowest since December 2008, left traders scrambling to cover
long exposures and sent yields surging.
    Benchmark 10-year Treasuries yielded 1.75
percent on Monday, near their closing levels from Friday, after
jumping from 1.62 percent before the jobs data was released.
    Thirty-year bonds yielded 2.97 percent on
Monday, they are up from 2.82 percent before the jobs report.
    The higher yields may help demand for new Treasury sales
this week, including $32 billion in three-year notes on Tuesday,
$24 billion in 10-year notes on Wednesday and $16 billion in
30-year bonds on Thursday.
    The Fed will purchase Treasuries every day next week as part
of its ongoing purchase program, including between $2.75 billion
and $3.50 billion in notes due 2020 to 2023 on Monday.

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