* ADP payrolls show lower-than-expected job gains
* U.S. jobless claims near lowest since Nov 1973
* U.S. non-manufacturing index rises in Dec
* U.S. Treasury yields fall to multiweek lows
(Recasts, adds comment, data on jobless claims, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 5 U.S. Treasury debt yields
dropped broadly on Thursday, falling for a third straight
session, as investors grew uncertain about the incoming Trump
administration and waited for more clarity about its policies
before taking more positions.
Yields should rise, although for the next few weeks they
likely will be range-bound as investors are in wait-and-see
mode, said Justin Lederer, interest rate strategist at Cantor
Fitzgerald in New York.
"There's a lot of uncertainty until the new administration
takes place," he added.
Along with the Trump-related uncertainty, the Treasuries
rally has been fueled by the release of Federal Reserve minutes
from last month's meeting on Wednesday. Policymakers thought the
economy could grow more quickly because of fiscal stimulus under
the Trump administration and many were eyeing faster interest
rate increases, minutes showed.
Thursday's rally in bond prices - which move inversely to
yields - was led by the intermediate sector of the curve, the
U.S. five-year and seven-year notes. Yields fell to four-week
Long-dated U.S. debt yields also slid, with 30-year bonds
sinking to five-week lows and 10-year notes to four-week
Buying in Treasuries also accelerated after
weaker-than-expected U.S. private sector payrolls data.
The ADP National Employment Report showed that U.S. private
employers added 153,000 jobs last month, below economists'
expectations for a gain of 170,000.
"The weaker ADP figure does represent a downside risk to our
estimate (of non-farm payrolls of 200,000), but given the ADP's
very hit-and-miss record, particularly around year-end, we're
happy to stick with that slightly above consensus forecast,"
said Paul Ashworth, chief U.S. economist at Capital Economics in
U.S. data on initial jobless claims and the
non-manufacturing index painted a rosier picture of the economy,
but did little to push yields higher.
U.S. weekly jobless claims dropped to 235,000 for the week
ended Dec. 31. That was close to the 233,000 touched in
mid-November, which was the lowest level since November 1973.
The U.S. non-manufacturing index, meanwhile rose to 57.2 in
December, higher than the expected reading of 56.2.
In late-morning trading, the U.S. 10-year note
was up 13/32 in price to yield 2.402 percent, compared with
2.452 percent late on Wednesday. It hit a four-week low of 2.401
U.S. 30-year bond prices were up 21/32, yielding 3.012
percent, down from Wednesday's 3.048 percent. Yields
touched a five-week trough of 3.004 percent.
U.S. two-year note yields were at 1.194 percent
from 1.234 percent on Wednesday.
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Chizu
Nomiyama and Jeffrey Benkoe)