March 7, 2014 / 2:08 PM / in 4 years

TREASURIES-Yields highest in six weeks after solid jobs gains

* Yields rise to highest since Jan 23 as jobs gains solid
    * Safety bid seen holdings yields artificially low
    * Treasury to sell $64 bln coupon-bearing debt next week

    By Karen Brettell
    NEW YORK, March 7 (Reuters) - U.S. Treasuries yields rose to
their highest levels in six weeks on Friday after job growth
rose more than expected in February, which could ease fears of
an abrupt slowdown in economic growth and keep the Federal
Reserve on track in reducing its monetary stimulus.
    Employers added 175,000 jobs to their payrolls last month
after creating 129,000 new positions in January, the Labor
Department said on Friday. The unemployment rate, however, rose
to 6.7 percent from a five-year low of 6.6 percent.
 
    Benchmark 10-year notes dropped 16/32 in price with yields
 rising to 2.81 percent, up from 2.73 percent before
the data was released, the highest level since January 23.
Thirty-year bonds dropped 27/32 in price to yield
3.74 percent, up from 3.68 percent before the release.
    The jump in yields was also seen reflecting reticence by
investors to buy the bonds at recent levels as many see rates as
having been held down by unrest in Turkey and the Ukraine and
not fully reflecting the outlook for continued moderate growth
in the U.S. economy.
    "Those lower yields were created by distress, once by the
Turkey situation at the beginning of February and once by the
Ukraine situation at the beginning of this month. Those are not
investor levels they are excess levels in the market. Now we are
moving back to fair value," said Tom Tucci, head of Treasuries
trading at CIBC in New York.
    Treasuries may also stay under pressure ahead of new supply
next week, when the government will sell $64 billion in new
coupon-bearing debt. This will include $30 billion in three-year
notes, $21 billion in 10-year notes and $13 billion in 30-year
bonds.

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