March 9, 2018 / 3:33 PM / 10 months ago

TREASURIES-Yields rise broadly after strong U.S. jobs report

    * U.S. non-farm payrolls show 313,000 gain, boost yields
    * Markets react little to decline in U.S. wage gain
    * Rates futures still price in three US rate hikes

 (Adds details, comment, byline, table, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, March 9 (Reuters) - U.S. Treasury yields advanced
across the board after data showed the world's largest economy
created far more jobs than expected in February, reinforcing
expectations the Federal Reserve would raise interest rates at
least three times this year.
    Investors largely shrugged off a slowdown in average hourly
earnings growth, a closely watched inflation metric, pushing
yields to session highs following the data.
     U.S. nonfarm payrolls expanded by 313,000 jobs last month,
boosted by the largest gain in construction jobs since 2007. The
increase in payrolls last month was the biggest since July 2016.
    The average hourly earnings, however, edged up four cents,
or just 0.1 percent, to $26.75 in February, a slowdown from the
0.3 percent rise in January. That lowered the year-on-year
increase in average hourly earnings to 2.6 percent from 2.8
percent in January.
    "The headline print is sort of a shockingly strong number,
the guts of the report are as good," said Tom Porcelli, chief
U.S. economist at RBC Capital Markets in New York.
    He said market participants would likely make a big deal
about the decline in wage gain, but this was offset by a 0.3
percent increase in wages of production and non-supervisory
workers, who represent 80 percent of the work force.
    "It's a really good outcome...When 80 percent of the pie
experiences a gain like this it's better than when 20 percent of
the pie does, like we saw last month."
    Traders of U.S. short-term interest-rate futures on Friday
kept bets that the Fed will stick to three rate hikes this year.
They also continued to price in just a one-in-four chance of a
fourth rate hike this year, based on a Reuters analysis of fed
funds futures contracts traded at CME Group Inc.
    In mid-morning trading, U.S. benchmark 10-year yields were
up at 2.9029 percent after earlier hitting session
highs, from Thursday's 2.866 percent.
    U.S. 30-year yields also touched the day's peak and last
traded at 3.168 percent, compared with 3.132 percent
late on Thursday.
    U.S. two-year yields rose to a one-week high of 2.283
percent and were last at 2.274 percent, from
Thursday's 2.254 percent.
      March 9 Friday 10:14AM New York / 1514 GMT
 US T BONDS JUN8               143          -0-17/32  
 10YR TNotes JUN8              119-244/256  -0-56/25  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             1.645        1.6745    0.000
 Six-month bills               1.84         1.8827    0.003
 Two-year note                 99-244/256   2.2743    0.020
 Three-year note               99-118/256   2.4414    0.022
 Five-year note                99-212/256   2.6621    0.027
 Seven-year note               99-140/256   2.822     0.030
 10-year note                  98-184/256   2.8993    0.033
 30-year bond                  96-216/256   3.1638    0.032
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        29.50         0.75    
 U.S. 3-year dollar swap        24.75         1.00    
 U.S. 5-year dollar swap        13.00         0.50    
 U.S. 10-year dollar swap        2.25        -0.50    
 U.S. 30-year dollar swap      -16.75        -0.75    
 (Additional reporting by Karen Brettell; Editing by Bernadette
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