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Bonds News

TREASURIES-Yields approach 1.5% after three-day stall; Powell speech eyed

 (Updates prices, adds Beige Book, Evans comments)
    By Chuck Mikolajczak
    NEW YORK, March 3 - Longer-term U.S. Treasury yields rose on
Wednesday, as investors looked to comments from Federal Reserve
Chair Jerome Powell on Thursday for signs the central bank was
poised to concede the risk of a rapid rise in interest rates. 
    Powell is set to speak at 12:05 p.m. EST (1705 GMT) before a
virtual Wall Street Journal Jobs Summit and his remarks will be
watched for any clues to a possible change in Fed language ahead
of the March 16-17 policy meeting.  
    The benchmark 10-year note was poised to snap a three-day
streak of declines following a jump to a one-year high of 1.614
percent last week, with many Fed officials having downplayed the
rise in recent days. 
    Fed Governor Lael Brainard's comments on Tuesday
acknowledging concern over the possibility of a rapid rise in
yields dampening economic activity were noted by investors as
comments from many other Fed officials since Powell's testimony
to the Senate Banking Committee last week largely shrugged off
the spike in yields.
    "Today we are rising a little bit on concerns that some of
the central bankers around the world are not taking the move
higher in rates seriously enough," said Gennadiy Goldberg,
interest rates strategist at TD Securities in New York. 
    "There is still a lot of uncertainty, a lot of folks are
concerned that rates can continue to rise if the Fed doesn’t
push back and if central banks don’t push back sufficiently."
    On Wednesday, Chicago Federal Reserve Bank President Charles
Evans reiterated the view that the Fed will not need to further
ease policy, with the recent jump in yields last week reflecting
economic improvements.
    The yield on 10-year Treasury notes was up 4.9
basis points to 1.464%. 
    The trading also pushed up a closely watched part of the
U.S. Treasury yield curve measuring the gap between yields on
two- and 10-year Treasury notes, seen as an
indicator of economic expectations, as wide as 135.4 basis
points, the most since Friday. 
    Economic data was a mixed bag, with the ADP National
Employment report showing private payrolls rose by 117,000 in
February, short of the 177,000 estimate, although January was
revised upward to 195,000. The data comes ahead of Friday's
payrolls report from the Labor Department, with estimates
calling for nonfarm payrolls to rise by 180,000.
    A report from the Institute for Supply Management on the
services sector showed a decrease in February to 55.3, short of
the 58.7 estimate but still above the 50 mark that indicated
expansion.
    The Fed's "Beige Book" of economic activity showed a modest
pace of recovery over the first weeks of the year, with
businesses optimistic about the coming months and robust housing
demand, but a lethargic improvement in the labor market.

    The yield on the 30-year Treasury bond was up
3.1 basis points to 2.246%. 
    
      March 3 Wednesday 3:14PM New York / 2014 GMT
                               Price                  
 US T BONDS JUN1               158-20/32    -0-27/32  
 10YR TNotes JUN1              133-28/256   -0-112/2  
                                            56        
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.04         0.0406    0.000
 Six-month bills               0.06         0.0609    0.000
 Two-year note                 99-248/256   0.1407    0.018
 Three-year note               99-136/256   0.2845    0.030
 Five-year note                98-234/256   0.722     0.045
 Seven-year note               99-244/256   1.132     0.049
 10-year note                  96-224/256   1.4635    0.049
 30-year bond                  91-244/256   2.2455    0.031
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         9.00        -0.50    
 spread                                               
 U.S. 3-year dollar swap        11.25        -0.50    
 spread                                               
 U.S. 5-year dollar swap        10.75        -0.75    
 spread                                               
 U.S. 10-year dollar swap        6.25        -0.25    
 spread                                               
 U.S. 30-year dollar swap      -26.75         0.00    
 spread                                               
 
 (Reporting by Chuck Mikolajczak; editing by Jonathan Oatis)
  
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