TREASURIES-Yields touch records at both ends of the curve in volatile session
Updates with market activity, analyst comment
By Ross Kerber
Feb 5 (Reuters) - Traders drove U.S. Treasury yields to record levels at both ends of the yield curve on Friday in a choppy session after a report showed employment growth rebounded less than forecast in January, strengthening expectations of more stimulus spending in Washington.
The benchmark 10-year yield US10YT=RR was last up 1.6 basis points at 1.1549% having risen to 1.188%, its highest since March 20, 2020.
At the other end of the curve the yield on the 2-year note, seen as an indicator of inflation expectations, was down almost a basis point at 0.1072% after matching its all-time low of 0.105% last reached May 8, 2020.
The movement left the closely watched part of the U.S. Treasury yield curve measuring the gap between yields on the two notes US2US10=RR, seen as an indicator of economic expectations, at 105 basis points, about 3 basis points higher than Thursday's close and its highest since May 2017.
Priya Misra, TD Securities head of global rates strategy, said the volatile trading showed investors focused on incremental news about spending talks in Washington after the morning's jobs report did not offer a clear case for either political parties' priorities.
Expectations "are all over the place," she said.
U.S. employment growth rebounded less than expected in January and job losses the prior month were deeper than initially thought, strengthening the argument for additional relief money from the government to aid the recovery from the COVID-19 pandemic.nL1N2KA34D
Analysts described the results as having mixed implications for government bond markets and giving traders a chance to take profits after yields on longer-term U.S. notes rose in recent days.
"The jobs report isn’t bad. You should expect a lot of volatility at a time like this," said Subadra Rajappa, head of U.S. Rates Strategy for Societe Generale in New York. The unemployment rate was at 6.3% in January, which Rajappa said put it close to achieving the 5% targeted by the U.S. Federal Reserve.
U.S. stocks rose on Friday with the S&P 500 and the Nasdaq hitting record highs as stimulus talks, upbeat earnings and progress in vaccine rollouts bolstered bets of a speedy economic recovery. nL4N2KB3YP
February 5 Friday 12:26PM New York / 1726 GMT
Current Yield %
Net Change (bps)
Three-month bills US3MT=RR
Six-month bills US6MT=RR
Two-year note US2YT=RR
Three-year note US3YT=RR
Five-year note US5YT=RR
Seven-year note US7YT=RR
10-year note US10YT=RR
20-year bond US20YT=RR
30-year bond US30YT=RR
DOLLAR SWAP SPREADS
Net Change (bps)
U.S. 2-year dollar swap spread
U.S. 3-year dollar swap spread
U.S. 5-year dollar swap spread
U.S. 10-year dollar swap spread
U.S. 30-year dollar swap spread
(Reporting by Ross Kerber in Boston; editing by Jonathan Oatis, Kirsten Donovan)