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TREASURIES-Yields fall in line with Europe, ahead of U.S. jobs data
* U.S. data generally positive overall
* U.S. yields impacted by those in Europe
* Traders unlikely to make big bets ahead of payrolls.
(Recasts, adds comment, table, byline, updates prices in text)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 3 (Reuters) - U.S. Treasury yields slid on
Thursday, pressured by falls in Europe after a surprising drop
in euro zone inflation that could constrain the European Central
Bank's efforts to unwind its economic stimulus this year.
Thursday's generally positive U.S. economic data gave a lift
to yields, but that did not last. Analysts said investors were
unlikely to make big bets ahead of Friday's U.S. non-farm
payrolls report.
"Today's moves were generally overseas-driven," said Justin
Lederer, Treasury analyst at Cantor Fitzgerald in New York. "We
had weaker inflation in Europe and the impact spilled over to
Treasuries.
Data showed that euro zone inflation fell to 1.2 percent in
April, according to the Eurostat flash estimate. Economists
polled by Reuters had expected it to be unchanged from 1.3
percent in March.
That pushed French and German
10-year government bond yields 2-week lows after the data.
U.S. yields edged up from lows a little bit after the
release of U.S. data.
Reports showed the U.S. trade deficit narrowed sharply in
March as exports increased to a record high amid a surge in
deliveries of commercial aircraft and soybeans.
While other data on Thursday showed a modest increase in new
applications for jobless benefits last week, the number of
Americans receiving unemployment aid fell to its lowest level
since 1973, pointing to tightening labor market conditions.
In mid-morning trading, U.S. benchmark 10-year yields fell
to 2.945 percent from 2.964 percent late on
Wednesday.
U.S. 30-year bonds slid to 3.118 percent, from
3.134 percent.
U.S. two-year yields were also down at 2.476
percent, from 2.496 percent.
The fall in yields came after Wednesday's quarterly
refunding announcement showed an increase in the supply of
government debt issuance to finance a huge fiscal deficit.
Overall, analysts said the prospect of higher debt supply
should keep U.S. yields elevated.
Next (Frankfurt: 779551 - news) up, market participants are looking to U.S. nonfarm
payrolls data due out on Friday. Analysts are expecting an
addition of 192,000 jobs, according to a Reuters poll.
May 3 Thursday 9:54AM New York / 1354 GMT
Price
US T BONDS JUN8 143-17/32 0-9/32
10YR TNotes JUN8 119-176/256 0-44/256
Price Current Net
Yield % Change
(bps)
Three-month bills 1.7875 1.8205 -0.002
Six-month bills 1.975 2.0225 -0.006
Two-year note 99-206/256 2.4761 -0.020
Three-year note 99-82/256 2.6158 -0.022
Five-year note 99-224/256 2.777 -0.025
Seven-year note 99-220/256 2.8973 -0.023
10-year note 98-80/256 2.9495 -0.014
30-year bond 97-168/256 3.1213 -0.013
DOLLAR SWAP SPREADS
Last (bps) Net (LSE: 0LN0.L - news)
Change
(bps)
U.S. 2-year dollar swap 27.25 0.50
spread
U.S. 3-year dollar swap 22.25 0.50
spread
U.S. 5-year dollar swap 13.00 0.50
spread
U.S. 10-year dollar swap 3.50 0.50
spread
U.S. 30-year dollar swap -11.25 0.50
spread
(Reporting by Gertrude Chavez-Dreyfuss
Editing by Chizu Nomiyama and Nick Zieminski)
