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TREASURIES-Yields steady in choppy trading ahead of U.S. payrolls

reuters.com · 09/01/2021 10:57
TREASURIES-Yields steady in choppy trading ahead of U.S. payrolls

By Karen Pierog

- U.S. Treasury yields held their ground on Wednesday after falling in the wake of weaker-than-expected August private payrolls ahead of this week's key government jobs report.

The benchmark 10-year yield US10YT=RR, which rose as high as 1.334% earlier in the session, was last unchanged at 1.302%.

Private payrolls increased by 374,000 jobs last month, the ADP National Employment Report showed on Wednesday. Data for July was revised slightly down to show 326,000 jobs were added instead of the initially reported 330,000. nL1N2Q30WG

Economists polled by Reuters had forecast private payrolls would increase by 613,000 jobs in the report, which has been an unreliable indicator of labor market health.

Still, Brian Nick, chief investment strategist at Nuveen, said movements in Eurodollar futures and the 10-year Treasury Inflation-Protected Securities yield and breakeven rate US10YTIP=RR were "a market signal for maybe the economy is not so strong and the (U.S. Federal Reserve) is going to be able to stay on hold for a while longer."

Attention now turns to Friday's release by the U.S. Labor Department of its August employment report.

Job gains above 500,000 should keep the Fed on track to announce or strongly signal at its September meeting plans to taper $120 billion in monthly purchases of Treasuries and mortgage-backed securities, a Citi Research report said.

A Reuters survey of economists forecast private payrolls likely increased by 700,000 in August from a 703,000 rise in July. With government jobs expected to have increased by about 50,000, that would mean overall payrolls advancing by 750,000.

Nick noted that with enhanced federal jobless benefits ending in all states next week, the October report will be the first "clean month" of data.

He added that bond market will be looking for clues on when the Fed is going to hike interest rates in future jobs data.

The five-year note yield US5YT=RR, which is more sensitive to intermediate interest rate hikes, was last up less than a basis point at 0.7756%.

A closely watched part of the yield curve that measures the gap between yields on two- and 10-year Treasury notes US2US10=RR was last less than a basis point flatter at 109.08 basis points.

September 1 Wednesday 10:36AM New York / 1436 GMT


Price

Current Yield %

Net Change (bps)

Three-month bills US3MT=RR

0.045

0.0456

0.000

Six-month bills US6MT=RR

0.0575

0.0583

0.000

Two-year note US2YT=RR

99-214/256

0.2075

-0.002

Three-year note US3YT=RR

99-232/256

0.407

0.008

Five-year note US5YT=RR

99-224/256

0.7756

0.005

Seven-year note US7YT=RR

100-80/256

1.0785

0.000

10-year note US10YT=RR

99-132/256

1.302

0.000

20-year bond US20YT=RR

98-116/256

1.843

-0.005

30-year bond US30YT=RR

101-204/256

1.9208

-0.006





DOLLAR SWAP SPREADS




Last (bps)

Net Change (bps)


U.S. 2-year dollar swap spread

9.25

0.50


U.S. 3-year dollar swap spread

12.00

-0.25


U.S. 5-year dollar swap spread

9.00

0.25


U.S. 10-year dollar swap spread

1.75

0.25


U.S. 30-year dollar swap spread

-26.75

0.50






(Reporting by Karen Pierog; Editing by Alexander Smith)

((karen.pierog@thomsonreuters.com; +1 312 408 8647; Reuters Messaging: karen.pierog.thomsonreuters.com@reuters.net))