* Yields fall after payrolls, 10-year notes yield 2.67 pct
* Employers add 113,000 jobs, fewer than expected
* Fed buys $659 mln notes due 2024-2031
* Yellen testimony, retail sales and supply focus for next
By Karen Brettell
NEW YORK, Feb 7 U.S. Treasuries yields fell on
Friday after employers hired far fewer workers than expected in
January, suggesting a loss of momentum in the economy at the
same time as the Federal Reserve pares its bond purchase
Nonfarm payrolls rose only 113,000 in January, below
economists' expectations of 185,000 jobs, and job gains for
December were barely revised higher, while the unemployment rate
hit a new five-year low of 6.6 percent.
"It's disappointing," said David Coard, head of fixed income
sales and trading at Williams Capital Group in New York.
The report was seen as unlikely to sway the Federal Reserve
from continuing to make reductions in its bond purchase program,
however, with the next Fed meeting not scheduled until March.
"I think you would have to have significant weakness or you
would need to see this disappointing trend extend another month
or two," said Coard.
The Fed last week said it would reduce its monthly bond
purchases by $10 billion to $65 billion and it is expected to
continue cutting in $10 billion increments.
Five-year and seven-year notes, the most sensitive to Fed
interest rate policy, were the best performers after the data.
Five-year notes gained 8/32 in price to yield
1.47 percent, down from 1.54 percent before the data. Seven-year
notes rose 10/32 in price to yield 2.12 percent, down
from 2.19 percent.
Benchmark 10-year Treasuries were last up 10/32
in price to yield 2.67 percent, down from 2.72 percent before
the data was released. Thirty-year bonds rose 10/32
in price to yield 3.65 percent, down from 3.68 percent.
Traders are next focused on testimony by new Fed Chair Janet
Yellen, who is due to give her first testimony before the House
Financial Services Committee on Tuesday and Thursday.
Retail sales data on Thursday will also be watched for signs
of strength in consumer spending.
The Treasury will also sell $70 billion in new
coupon-bearing debt next week, including $30 billion in
three-year notes, $24 billion in 10-year notes and $16 billion
in 30-year bonds.
The Fed bought $659 million in notes due 2024 to 2031 on
Friday as part of its ongoing purchases. It will purchase
between $2.25 billion and $2.75 billion in notes due 2021 to
2023 on Monday.