TREASURIES-Bonds on track for worst month since Jan 2009
(Corrects first paragraph to say worst monthly performance in
almost eight years)
* Trump policies primary driver of U.S. yield moves
* U.S. payroll data next week main economic focus
* Two-year note yields hit highest since 2010
By Karen Brettell
NEW YORK, Nov 25 (Reuters) - U.S. Treasuries were on track
for their worst monthly performance in almost eight years on
Friday as investors evaluated how much further the sell-off
sparked by the surprise election of Republican Donald Trump as
U.S. president has to run.
Investors are betting that Trump will adopt policies that
increase spending and debt as well as spur growth and inflation,
which would erode the value of U.S. bonds.
Even (Taiwan OTC: 6436.TWO - news) at higher yields, investors are reluctant to buy the
debt in case weakness persists, with much uncertainty remaining
over the exact policies Trump will pursue.
"There are a fair number of people that think we're not
there yet, that yields can still move higher," said Gennadiy
Goldberg, an interest rate strategist at TD Securities in New (KOSDAQ: 160550.KQ - news)
York. "There are a number of people that want to buy in but also
don't want to get whipped by the next 25 to 30 basis point
selloff."
Benchmark 10-year notes fell 2/32 in price to
yield 2.36 percent on Friday. The yields have jumped from about
1.80 percent before Trump's election on Nov. 8.
Two-year notes, which are the most sensitive to
interest rate increases, yielded 1.14 percent. The yields rose
to 1.17 percent in overnight trading, the highest since April 5,
2010.
Treasuries were on track for their worst monthly performance
since January 2009, according to Bank of America Merrill Lynch's
U.S. Treasury index, with a loss of 2.77 percent so
far.
Investors were reluctant to enter new positions with light
liquidity a day after the bond market was closed on Thursday for
the U.S. Thanksgiving holiday. The bond market will have an
early close at 2 p.m. EST (1900 GMT) on Friday.
The next major economic focus will be the U.S. payrolls
report for November due on Dec. 2.
Month-end rebalancing before Wednesday may increase some
demand for bonds.
The Federal Reserve's meeting on Dec. 13-14 will also be
closely watched as the U.S. central bank is viewed as highly
likely to raise interest rates for the first time this year.
Futures traders are pricing in 94 percent chance of a rate
hike at the December meeting, according to the CME Group (Kuala Lumpur: 7018.KL - news) 's
FedWatch Tool.
(Editing by Meredith Mazzilli and Lisa Shumaker)