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TREASURIES-Yields rise as oil deal boosts inflation expectations
November 30, 2016 / 2:25 PM / in a year

TREASURIES-Yields rise as oil deal boosts inflation expectations

* OPEC deal boosts inflation expectations
    * ADP data shows 216,000 job gains
    * Friday's jobs report in focus

    By Karen Brettell
    NEW YORK, Nov 30 (Reuters) - U.S. Treasury yields rose on
Wednesday as the Organization of the Petroleum Exporting
Countries agreed to its first output cuts since 2008, sending
oil prices higher and boosting expectations of higher inflation.
    Oil prices jumped more than 8 percent to a five-week high as
some of the world's largest producers gathered in Vienna to
discuss the cut. 
    A source told Reuters the agreement was in line with an
accord reached in Algiers in September. OPEC member Algeria was
proposing to set a new production ceiling at 32.5 million
barrels per day, down from current levels of 33.6 million.
 
    "I think most of the move this morning was related to the
OPEC news, speculation about a production cut and the increase
in oil prices and as a result inflation expectations as well,"
said Thomas Simons, a money market economist at Jefferies in New
York.
    Rising inflation erodes the value of bonds.
    Benchmark 10-year notes were last down 23/32 in
price to yield 2.39 percent, up from 2.30 percent on Tuesday.
    U.S. bond yields have soared since the surprise election of
Donald Trump as president on Nov. 8 as investors bet that he
will enact policies that increase spending and debt as well as
spur growth and inflation.
    Data on Wednesday showed that U.S. consumer spending
increased less than expected in October as households took
advantage of rising incomes to boost savings to a seven-month
high, but it remained strong enough to support economic growth
in the fourth quarter. 
    U.S. private employers also added 216,000 jobs in November,
well above economists' expectations, a report by payroll
processor ADP showed on Wednesday. 
    The next major economic focus will be Friday's employment
report for November, which is expected to show that employers
added 175,000 jobs during the month, according to the median of
100 economists polled by Reuters. 
    Bonds had gained on month-end buying earlier this week
before weakness resumed on Wednesday.

 (Editing by Lisa Von Ahn)

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