* February payrolls report seals view on U.S. rate hike next
* Some traders hoped for stellar job gain after ADP data
* Wage growth rebounds but falls short of expectations
(Updates market action, adds quote)
By Richard Leong
NEW YORK, March 10 U.S. Treasury yields fell on
Friday with benchmark yields receding from 12-week highs after
data on domestic hiring last month came in stronger than
consensus forecasts but fell short of the most optimistic views.
Still the latest jobs figures were solid enough to cement
expectations the Federal Reserve will raise interest rates next
Wednesday at its two-day policy meeting, analysts and investors
"The Fed will move next week. That's baked in the cake. This
report did nothing to dissuade that," said John Bredemus, vice
president at Allianz Investment Management in Minneapolis.
U.S. employers added 235,000 workers in February, beating
the 190,000 hiring forecast among analysts polled by Reuters.
However, there were expectations of an even stronger figure
following a report from payroll processor ADP on Wednesday that
showed a 298,000 increase in private sector jobs.
Wage growth also missed forecasts, rising 0.2 percent versus
an expected 0.3 percent increase.
"That might have disappointed some people," said Kathy
Jones, chief fixed income strategist at Schwab Center for
Financial Research in New York.
In choppy trading, benchmark 10-year Treasury yields
were last at 2.593 percent, down 0.5 basis points
from late on Thursday after rising to 2.624 percent earlier on
Friday, which was last seen in mid-December, Reuters data
The two-year yield, which is most sensitive to
traders' views on Fed policy, was down nearly 1 basis point at
1.364 percent. It reached 1.388 percent earlier on Friday, which
was its highest since August 2009.
Interest rates futures implied traders saw a 90 percent
chance the U.S. central bank would raise rates by a quarter
point to 0.75-1.00 percent next week, little changed from
late on Thursday, according to CME Group's FedWatch program.
March 10 Friday 9:42AM New York / 1442 GMT
US T BONDS JUN7 146-20/32 -0-6/32
10YR TNotes JUN7 122-240/256 0-28/256
Price Current Net
Yield % Change
Three-month bills 0.74 0.7516 0.018
Six-month bills 0.8775 0.8936 0.011
Two-year note 99-134/256 1.3716 0.001
Three-year note 99-218/256 1.6759 -0.008
Five-year note 98-226/256 2.1132 -0.012
Seven-year note 98-44/256 2.4117 -0.009
10-year note 97 2.5946 -0.003
30-year bond 96-104/256 3.1871 0.004
DOLLAR SWAP SPREADS
Last (bps) Net
U.S. 2-year dollar swap 32.25 -1.00
U.S. 3-year dollar swap 25.00 0.50
U.S. 5-year dollar swap 9.75 0.75
U.S. 10-year dollar swap -3.25 0.50
U.S. 30-year dollar swap -38.25 0.75
(Reporting by Richard Leong; Editing by Meredith Mazzilli)