* BOE cuts rates for the first time since 2009
* U.S. yields more attractive as UK 10-yr Gilts hit record
lows
* U.S. 2-5-year yields hit more than 3-week lows
* Traders await Friday's U.S. July jobs data
By Sam Forgione
NEW YORK, Aug 4 (Reuters) - U.S. Treasury yields fell on
Thursday, with some short- and medium-term issues hitting their
lowest levels in more than three weeks, after the Bank of
England cut interest rates for the first time since 2009 and
said it would buy government bonds.
The BoE cut rates 25 basis points to 0.25 percent on
Thursday and said it would buy 60 billion pounds of government
debt to ease the blow from Britain's June 23 vote to leave the
European Union. The Bank said most BoE policymakers expected to
cut the rate even closer to zero later this year.
The move pushed yields on 10-year UK government bonds, or
Gilts, to a record low of 0.646 percent, which
further increased the attractiveness of U.S. yields by
comparison.
Yields on Treasuries maturing between two, three and five
years hit their lowest levels in more than three weeks of 0.647
percent, 0.745 percent and 1.017 percent
, respectively. Yields move inversely to prices.
Benchmark 10-year U.S. yields hit their lowest
level in three days at 1.484 percent, while 30-year Treasuries
prices rose more than a full point, their yields
also hitting a three-day low of 2.233 percent.
"I wouldn't say it's a huge surprise to see the U.S. trading
in concert with the Gilt move," said William Marshall, interest
rate strategist at Credit Suisse in New York. "It seems fairly
clear that if things evolve as expected, the BoE will be near
zero percent on its policy rate by the end of the year."
Low-to-negative yields on government bonds outside of the
United States have helped underpin demand for U.S. Treasuries,
analysts have said.
"In a world long-bereft of yield in long-duration safe-haven
government bonds globally, (the BoE move) makes those Treasuries
a little bit more attractive," said John Briggs, U.S. rates
strategist at RBS in Stamford, Connecticut.
He said the fall in U.S. yields may have been more dramatic
if investors were not anticipating Friday's U.S. July jobs
report. Economists polled by Reuters expect U.S. employers to
have added 180,000 jobs, compared with 287,000 in June.
Some analysts said the data could have an impact on
expectations about the timing of the next Federal Reserve
interest rate increase. Federal funds futures on Thursday
implied traders saw only a 33 percent chance of a rate hike from
the U.S. central bank this year, according to data from CME
Group's FedWatch program.
August 4 Thursday 11:03AM New York / 1503 GMT
Price
US T BONDS SEP6 173-21/32 1-16/32
10YR TNotes SEP6 133-20/256 0-128/25
6
Price Current Net
Yield % Change
(bps)
Three-month bills 0.2725 0.2765 -0.006
Six-month bills 0.4 0.4075 0.002
Two-year note 100-54/256 0.643 -0.028
Three-year note 100-2/256 0.7473 -0.035
Five-year note 100-130/256 1.0203 -0.050
Seven-year note 99-176/256 1.2969 -0.055
10-year note 101-60/256 1.4888 -0.053
30-year bond 105-160/256 2.24 -0.052
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 26.25 0.50
spread
U.S. 3-year dollar swap 21.00 1.00
spread
U.S. 5-year dollar swap 5.00 1.00
spread
U.S. 10-year dollar swap -11.00 -0.25
spread
U.S. 30-year dollar swap -47.00 -0.25
spread
(Reporting by Sam Forgione; Editing by Dan Grebler)