February 5, 2015 / 8:03 PM / 3 years ago

TREASURIES-U.S. bond prices fall with eyes on Greece before payrolls

* Greek PM shoots back after ECB shuns Greek bonds
    * U.S. jobless claims, trade mixed ahead of jobs report
    * Investors focus on possible rebound in hourly earnings
    * Wall Street gains curb demand for lower-yielding bonds

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, Feb 5 (Reuters) - U.S. Treasuries prices fell on
Thursday as traders pared bond holdings ahead of the January
payrolls report, though market losses were limited due to
tension between Greece and its euro zone partners in their debt
negotiation.
    Another solid payroll reading, coupled with a possible
rebound in wage growth, will likely revive views that the
Federal Reserve might consider raising interest rates as early
as this summer, analysts and traders said.
    "Right now it's to be as flat as possible before tomorrow's
jobs report," said Mike Cullinane, head of Treasuries trading at
D.A. Davidson in St. Petersburg, Florida.
    Stronger oil prices helped propel Wall Street share prices
higher and curbed demand for Treasuries. 
    The bond market retreated following a rally late on
Wednesday after the European Central Bank stunned investors by
deciding to stop accepting Greek bonds as collateral to raise
cash. The move stoked anxiety about the solvency of Greek banks
and fears Greece might exit the euro zone bloc. 
    Greek Prime Minister Alexis Tsipras shot back at the
European Union on Thursday. "Greece won't take orders any more,
especially orders through emails," he said. 
    "The Greece/euro zones situation is fluid and there doesn't
seem to be a resolution anytime soon," Cullinane said.
    Thursday's mixed bag of domestic data on jobless claims,
trade balance and productivity did little to change investors'
view on the path of economic growth. 
    "Data have been coming in weaker, but the Fed seems to be
holding the view of moving (rates) in June," said Bret Barker,
portfolio manager at TCW in Los Angeles.
    Economists polled by Reuters forecast U.S. employers likely
added 234,000 workers in January, less than the 252,000 increase
in December. They see the jobless rate holding at a 6-1/2 year
low of 5.6 percent, and anticipate a 0.3 percent rebound in
average hourly earnings following a surprise 0.2 percent drop
the prior month.
    Some Fed officials have raised concerns about the lack of
wage increases despite an acceleration in jobs creation. They
reckon this sluggish income growth has hampered overall
inflation, which has been running below the Fed's 2 percent
target. 
    
    Benchmark 10-year Treasuries notes were down
4/32 in price with a yield of 1.810 percent, up 1.5 basis points
from late on Wednesday.
    The 30-year bond fell 19/32 in price, yielding
2.412 percent, up 2.5 basis points from Wednesday.
      

 (Reporting by Richard Leong; Editing by Meredith Mazzilli and
Diane Craft)

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