(Wilmington Trust representative corrects spelling of D'Eramo's
name in 8th paragraph)
* U.S. nonfarm payrolls growth beat expectations
* U.S. unemployment rate hits near six-year low
* ECB's Draghi says euro zone rates to stay low
By Sam Forgione
NEW YORK, July 3 U.S. benchmark Treasuries
yields hit two-month highs on Thursday after June U.S. nonfarm
payrolls growth beat expectations, while lingering uncertainty
about U.S. growth and comments from European Central Bank
president Mario Draghi capped the rise in yields.
Nonfarm payrolls increased by 288,000 jobs, the Labor
Department said on Thursday. Data for April and May were revised
to show a total of 29,000 more jobs created than previously
reported. The unemployment rate declined to near a six-year low
of 6.1 percent.
Economists polled by Reuters had forecast a gain of 212,000
jobs in June. It was the first time since the technology boom in
the late 1990s that employment has grown above a 200,000 pace
for five straight months.
"Employment has bucked the trend of some of the negative
data that we saw in the first quarter," said Justin Hoogendoorn,
fixed income strategist at BMO Capital Markets in Chicago. "It
surely will boost expectations for economic growth."
Analysts said, however, uncertainty as to whether U.S.
economic growth will meet stronger expectations after the
Federal Reserve concludes its monthly bond-buying program and
comments from Draghi limited the rise in yields.
Many expect the Fed to end its massive asset purchases in
October. Draghi, on Thursday, said that risks facing the euro
zone economy meant interest rates there will stay low for an
The comments stoked some demand for higher U.S. Treasuries
yields compared to German 10-year bund yields, which
are currently at 1.3 percent, analysts said.
"U.S. debt is still attracting some demand relative to other
sovereign debt given higher U.S. yields," said Dominick D'Eramo,
chief fixed income officer at Wilmington Trust in Wilmington,
U.S. Treasuries prices held losses after the Institute for
Supply Management said its services index ticked down to 56.0
last month from 56.3 in May, which was a nine-month high. The
reading fell shy of economists' forecasts for 56.3, according to
a Reuters survey.
Benchmark 10-year Treasury notes were last down
10/32 in price to yield 2.67 percent, from a yield of 2.63
percent late Wednesday. U.S. 30-year Treasury bonds were last
down 15/32 in price to yield 3.49 percent, from a yield of 3.47
percent late Wednesday.
The U.S. 10-year yield hit a two-month high of 2.69 percent,
while the 30-year yield hit a two-month high of 3.52 percent
following the jobs data.
U.S. stocks opened higher, with the Dow breaking above the
17,000 level for the first time, after the U.S. jobs data. The
benchmark S&P 500 index was last up 0.36 percent.
(Reporting by Sam Forgione; Editing by James Dalgleish)