March 8, 2018 / 9:12 PM / 6 months ago

TREASURIES-U.S. bond yield moves muted ahead of payrolls data

 (Updates news, quotes, prices, chart)
    By Kate Duguid
    NEW YORK, March 8 (Reuters) - The yield on the U.S.
benchmark government bond moved within a range of three basis
points on Thursday, continuing a trend of muted fluctuation in
the week ahead of Friday's payrolls data. 
    Yields remained range-bound this week amid fears of a trade
war, the resignation of Gary Cohn, the top economic adviser to
U.S. President Donald Trump, and news the European Central Bank
on Thursday dropped a long-standing pledge to increase its bond
buying if needed.
    Despite a choppy trading session, yields on Thursday
remained steady, with Treasury traders "waiting somewhat
patiently ahead of payrolls tomorrow, not wanting to push the
market in too big of a direction ahead of important data," said
Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle
Investments in Minneapolis.  
    The 10-year Treasury yield opened Monday at
2.850 percent, and was last up 0.7 basis points at 2.857
percent. The spread between the weekly high and low was 9.6
basis points, the high of 2.906 percent hit on Tuesday and the
low of 2.810 percent hit Monday. 
    According to a Reuters survey of economists, the Labor
Department's closely followed employment report will likely show
that nonfarm payrolls increased by 200,000 jobs last month,
matching January's gains. The unemployment rate is forecast to
have fallen one-tenth of a percentage point to 4.0 percent,
which would be the lowest level since December 2000.
    "We’re a little below consensus," said Ethan Harris, chief
economist at Bank of America Merrill Lynch, "with overall
payrolls up only 160,000." The bank's forecast is based on a
soft read from a proprietary indicator that uses direct deposit
check data.  
    The 10-year Treasury yield fell in late-morning trade as the
market digested news that the European Central Bank dropped its
easing bias. 
    The initial release of the ECB statement pushed up the
benchmark yield, tracking its German counterpart.
However, both fell during Draghi's subsequent news conference,
during which he noted that euro zone inflation remained
stubbornly low, and said "Our mandate is in terms of price
stability. Victory cannot be declared yet."
    But the U.S. yield moves were muted in comparison to the
German ones. The jump in Bund yields compared with the
Treasuries' move helped shrink the spread between the two
    The spread between German and U.S. benchmark bond yields hit
a session high of -218.60 above Wednesday's close at -221.0.
    The 10-year yield was last at 2.857 percent, below
Wednesday's close at 2.883 percent. The two-year yield
 was last at 2.250 percent below its last close at
2.254 percent. The 30-year yield was last at 3.123
percent, 2.8 basis points below Wednesday's close. 
    
    March 8 Thursday 3:50PM New York / 2050 GMT
                               Price                  
 US T BONDS JUN8               143-20/32    0-17/32   
 10YR TNotes JUN8              120-52/256   0-44/256  
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             1.645        1.6747    -0.010
 Six-month bills               1.8375       1.8804    0.000
 Two-year note                 99-254/256   2.2539    0.000
 Three-year note               99-134/256   2.4187    -0.002
 Five-year note                99-246/256   2.6334    -0.016
 Seven-year note               99-192/256   2.7896    -0.019
 10-year note                  99-8/256     2.8626    -0.020
 30-year bond                  97-120/256   3.1308    -0.020
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        29.00         0.50    
 spread                                               
 U.S. 3-year dollar swap        23.75         0.00    
 spread                                               
 U.S. 5-year dollar swap        12.75         1.00    
 spread                                               
 U.S. 10-year dollar swap        2.75         0.75    
 spread                                               
 U.S. 30-year dollar swap      -16.00         1.25    
 spread                                               
 

 (Reporting by Kate Duguid
Editing by Susan Thomas and Chizu Nomiyama)
  
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