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TREASURIES-Yields briefly plunge after U.S. March jobs report
April 7, 2017 / 2:19 PM / 8 months ago

TREASURIES-Yields briefly plunge after U.S. March jobs report

    * U.S. 10-,7-year yields touch lowest since Nov. 18
    * U.S. employers add fewer-than-expected 98,000 jobs in
    * Yields reverse course as weather seen influencing jobs
    * U.S. strike on Syrian airbase keeps yields depressed

    By Sam Forgione
    NEW YORK, April 7 (Reuters) - Benchmark U.S. Treasury yields
briefly touched their lowest levels since November on Friday
after data showed weaker-than-expected U.S. job growth in March,
but reversed course to stand modestly lower on the day after a
U.S. strike on a Syrian airbase. 
    Nonfarm payrolls increased by 98,000 jobs in March, the
fewest since last May, the Labor Department said. That figure
was far below economists' expectations for 180,000 according to
a Reuters poll.
    A drop in the unemployment rate to a near 10-year low of 4.5
percent suggested the labor market was still tightening,
however, while analysts said weather distorted the jobs growth
figure. Temperatures dropped and a storm lashed the U.S.
Northeast last month.
    U.S. 10- and seven-year yields briefly hit 2.269 percent and
2.072 percent, respectively, their lowest since Nov. 18, 2016.
U.S. 30-year yields touched 2.939 percent, their
lowest since mid-January. 
    Two-year yields touched a more than five-week low
of 1.198 percent, while three-year yields touched their lowest
since Dec. 9, 2016 at 1.387 percent and five-year yields touched
their lowest since Nov. 30, 2016 at 1.784 percent.
    "There was a bit of a knee-jerk reaction to the headline,
but to the extent that weather may have distorted this and the
fact that the unemployment rate is as low as it is, then I think
it may not cause markets to fundamentally rethink the near-term
outlook," said Mark Cabana, head of U.S. short rates strategy at
Bank of America Merrill Lynch in New York. 
    Last month had the worst influence from bad weather on a
March payrolls figure since 1977, said John Herrmann, an
interest rates strategist at Mitsubishi UFJ Securities USA Inc
in New York. He said he was anticipating a bounce back in jobs
in April and May and that a Federal Reserve interest rate
increase in June or September was still possible. 
    Analysts said yields remained lower on the day on safe-haven
buying after the United States fired cruise missiles at a Syrian
airbase from which U.S. President Donald Trump said a deadly
chemical weapons attack had been launched.
    The U.S. assault fueled uncertainty about international
relations including those between the United States and Russia,
analysts said, after the Kremlin called the strikes illegal
    "The world has just a myriad of problems and challenges,"
said Herrmann of Mitsubishi UFJ Securities. 
    U.S. 10-year yields were last at 2.300 percent,
from 2.343 percent late on Thursday.
      April 7 Friday 10:03AM New York / 1403 GMT
 US T BONDS JUN7               152-16/32    0-25/32   
 10YR TNotes JUN7              125-92/256   0-60/256  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.7925       0.805     -0.005
 Six-month bills               0.9175       0.9345    0.002
 Two-year note                 100-4/256    1.2419    -0.004
 Three-year note               100-130/256  1.4472    -0.001
 Five-year note                100-40/256   1.8419    -0.021
 Seven-year note               100-8/256    2.1201    -0.029
 10-year note                  99-124/256   2.3087    -0.034
 30-year bond                  100-240/256  2.9524    -0.036
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap        33.25        -0.50    
 U.S. 3-year dollar swap        28.50        -1.00    
 U.S. 5-year dollar swap        11.00        -0.25    
 U.S. 10-year dollar swap       -2.75        -0.25    
 U.S. 30-year dollar swap      -40.00        -0.50    
 (Reporting by Sam Forgione; Editing by Meredith Mazzilli)

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