* U.S. 10-,7-year yields touch lowest since Nov. 18
* U.S. employers add fewer-than-expected 98,000 jobs in
* Dudley says balance sheet shrinking may prompt only
"little pause" in hiking plans
* U.S. strike on Syrian airbase keeps yields from rising
(Updates prices, adds comments)
By Sam Forgione
NEW YORK, April 7 U.S. Treasury yields rose on
Friday, reversing a plunge sparked by weaker-than-expected U.S.
jobs growth data, after a top Federal Reserve official boosted
expectations for interest rate increases.
Benchmark 10-year Treasury notes last yielded 2.380 percent,
up nearly four basis points from late Thursday and well above
2.269 percent, their lowest since Nov. 18.
That session low was struck after the U.S. Labor Department
said nonfarm payrolls increased by 98,000 jobs in March, the
fewest since last May and far below economists' expectations for
180,000 according to a Reuters poll.
New York Fed President William Dudley said later that the
Fed might avoid raising interest rates at the same time that it
begins shrinking its $4.5 trillion bond portfolio, prompting
only a "little pause" in the central bank's rate hike plans.
Last week the influential Fed policymaker said the reduction
could begin as soon as this year, earlier than most economists
Analysts said investors interpreted the earlier remarks as
suggesting the Fed might significantly delay rate hikes to taper
its balance sheet, but Dudley's latest comments indicated the
pause would not be as significant.
"If they do taper the reinvestments not too aggressively,
then they won't have to pause for long," said Praveen Korapaty,
head of global rates strategy at Credit Suisse in New York.
Yields hit session highs across the board after Dudley's
remarks. Two- and three-year yields, the most vulnerable to Fed
rate increases, hit highs of 1.29 percent and 1.51 percent.
Two-year yields touched a more than five-week low of 1.198
percent, while three-year yields reached their lowest since Dec.
9, 2016 at 1.387 percent after the U.S. jobs data.
U.S. 30-year yields hit a session high of 3.009
percent after hitting 2.939 percent, their lowest since
mid-January, while five-year yields touched 1.921 percent after
touching 1.784 percent, their lowest since Nov. 30, 2016.
A U.S. strike on a Syrian airbase stoked safe-haven buying
and kept yields from rising further, said Priya Misra, head of
global rates strategy at TD Securities in New York.
Yields on Treasuries maturing in two to three years were set
to rise modestly for the week, while yields on Treasuries
maturing in five to 30 years were set for slight weekly
April 7 Friday 4:00PM New York / 2000 GMT
US T BONDS JUN7 151-9/32 -0-14/32
10YR TNotes JUN7 124-188/256 -0-100/2
Price Current Net
Yield % Change
Three-month bills 0.8075 0.8203 0.010
Six-month bills 0.9375 0.9549 0.023
Two-year note 99-234/256 1.2942 0.048
Three-year note 100-82/256 1.5127 0.065
Five-year note 99-198/256 1.923 0.060
Seven-year note 99-128/256 2.2027 0.054
10-year note 98-212/256 2.384 0.041
30-year bond 99-200/256 3.011 0.023
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 32.75 -1.00
U.S. 3-year dollar swap 27.75 -1.75
U.S. 5-year dollar swap 10.50 -0.75
U.S. 10-year dollar swap -2.75 -0.25
U.S. 30-year dollar swap -39.75 -0.25
(Reporting by Sam Forgione; Editing by Meredith Mazzilli and