June 5, 2020 / 1:44 PM / a month ago

TREASURIES-Yields surge on improved unemployment figures

    By Ross Kerber
    June 5 (Reuters) - U.S. Treasury yields spiked up on Friday
after a Labor Department report showed a much lower than
expected May unemployment rate.
    The benchmark 10-year yield was up 10.5 basis
points at 0.9252%, its first time above 0.9% since March 20 and
continuing a steady march higher in recent days as investors
sold government bonds and took on riskier assets.
    A key part of the U.S. Treasury yield curve also rose
dramatically.
    The Labor Department's monthly employment report showed the
jobless rate dropped to 13.3% last month from 14.7% in April.
Economists polled by Reuters had forecast the jobless rate
jumping to 19.8% in May.
    The figures reflected an improvement in the jobs market as
businesses reopened after closing due to the ongoing COVID-19
pandemic.
    "The sell-off in the bond market in the last few weeks seems
to be justified," said Subadra Rajappa, head of U.S. rates
strategy for Societe Generale in New York. 
    The report, she said, "probably points to a faster recovery,
at least in the jobs market, than people had expected."
    Jim Paulsen, chief investment strategist at the Leuthold
Group in Minneapolis, said, "It's not like we're back to normal
but that's a big turn."
    The 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, was at 70 basis 
points, about 15 basis points higher than Thursday's close and
its highest since February 2018.       
    The two-year  U.S. Treasury yield, which
typically moves in step with interest rate expectations, was  up
2.8 basis points at 0.222% in morning trading.
    
      June 5 Friday 9:15AM New York / 1315 GMT
                               Price                  
 US T BONDS SEP0               171-25/32    -2-7/32   
 10YR TNotes SEP0              136-244/256  -0-216/2  
                                            56        
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.155        0.1572    0.002
 Six-month bills               0.1825       0.1857    0.011
 Two-year note                 99-207/256   0.222     0.028
 Three-year note               99-128/256   0.2962    0.043
 Five-year note                98-220/256   0.4822    0.078
 Seven-year note               98-112/256   0.7301    0.093
 10-year note                  97-40/256    0.9252    0.105
 30-year bond                  88-240/256   1.7247    0.099
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap         7.75         0.00    
 spread                                               
 U.S. 3-year dollar swap         5.00         0.25    
 spread                                               
 U.S. 5-year dollar swap         3.50        -0.25    
 spread                                               
 U.S. 10-year dollar swap       -1.00         0.00    
 spread                                               
 U.S. 30-year dollar swap      -48.00         0.00    
 spread                                               
 
    

 (Reporting by Ross Kerber in Boston)
  
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