* Russia calls for U.N. meeting on Ukraine -reports
* U.S. nonfarm payrolls rise 288,000
* U.S. 10-year yields fall to 3-month low
(Updates prices, adds quote)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 2 Yields on U.S. 30-year bonds
dropped to their lowest in more than 10 months on Friday,
falling for a fourth straight session, as concerns about Russia
and Ukraine overshadowed an upbeat U.S. employment report.
U.S. 30-year bond yields fell as low as 3.34 percent, their
weakest level since June 19, 2013, after hitting session highs
on the jobs number. U.S. 10-year note yields, meanwhile, slid to
2.57 percent, a three-month trough, on news about Russia and
Reports that Russia had called for a meeting of the United
Nations Security Council over a Ukrainian army operation in the
southeastern city of Slaviansk drove a rally in Treasuries.
The report came after Treasuries sold off as the U.S.
nonfarm payrolls figure came in higher than expected.
"Shortly after this morning's jobs report, it looked like
the world might be returning to an 'old fashioned' bond market
where macroeconomic fundamentals rule," said Jonathan Lewis,
managing principal and chief investment officer, at Samson
Capital Advisors, in New York.
"Then the spotlight turned to Ukraine, a worsening
geopolitical environment, and suddenly the jobs report was
forgotten. Stocks are down, longer maturity treasuries have
turned from a loss to a gain, and gold is having its best day in
In afternoon trading, the benchmark 10-year U.S. Treasury
note was up 5/32 on the day to yield 2.58 percent,
compared with 2.62 percent late on Thursday. Yields hit session
highs of 2.70 percent following the jobs number.
Data showed that U.S. nonfarm payrolls surged by 288,000 in
April, the most since January 2012, while the jobless rate
dropped to a 5-1/2-year low of 6.3 percent. The headline jobs
figure handily beat Wall Street's expectations for an increase
of just 210,000.
Prices of 30-year Treasury bonds rose 23/32 to
yield 3.36 percent, from 3.41 percent the previous session.
Still, some economists took issue with the unemployment
rate, which included a decline in the labor force by 806,000,
the fourth-largest since data recording started in 1948.
"The market perceives the unemployment numbers as good on
quantity, but bad on quality," said Guy Lebas, chief fixed
income strategist, at Janney Montgomery Scott in Philadelphia.
"The five-year ... is a better response to the unemployment
rate rather than the 10- or 30-year because that's going to
embody the timing of the Fed rate hikes a little bit more
effectively," he said.
Lebas said the five-year sold off, but yields were not far
The five-year note was last down 3/32, yielding 1.72
percent, from 1.67 percent late Thursday. The yield hit the
day's high of 1.76 percent after the payrolls data was released,
while the low was 1.65 percent.
The 5-year note has led a selloff over the past few
"I still think overall there is a tremendous amount of
shorts in the market," said Tom di Galoma, head of fixed-income
at ED&F Man in New York.
"We've seen buyers on dips.cI think probably this is going
to continue with this thing in Ukraine and Russia. It's just a
continuation of this flight-to-quality bid."
(Editing by Diane Craft)