March 8, 2013 / 10:31 AM / 5 years ago

TREASURIES-US yields hold above 2 pct on bets of upbeat payrolls

LONDON, March 8 (Reuters) - U.S. Treasury yields crept up to new two-week highs on Friday as investors positioned for an above forecast jobs number, after a recent string of upbeat data made investors optimistic about the economic outlook.

Ten-year U.S. Treasury yields edged higher to touch 2.01 percent in early trading and were last little changed on the day at 2.00 percent.

The U.S. economy is expected to have added 160,000 non-farm jobs to its payroll last month, according to a Reuters poll of economists, a slight improvement on January’s 157,000 count.

But analysts say market expectations are for an even higher number and a 160,000 figure could pave the way for some safe-haven buying.

“If we get 160,000 I think the market will be slightly disappointed,” one trader said. “The data has been pretty reasonable out of the U.S. ... so you naturally should see that feed into higher employment numbers.”

The differing economic outlook for the United States and the euro zone has seen the 10-year yield gap between German and U.S. bonds rise above 50 basis points to its highest since January 2011.

An above consensus jobs number could see that spread widen further but that move would be limited, said Philip Shaw, chief economist at Investec.

“At the end of the day there is still a substantial correlation between economic performance in the euro zone as a whole and the U.S. so there has to be a limit to that spread widening,” Shaw added.

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