June 3, 2020 / 6:54 PM / a month ago

TREASURIES-Yields higher after payroll losses less than expected

 (Updates market activity, adds analyst comment)
    By Ross Kerber
    June 3 (Reuters) - U.S. Treasury yields rose on Wednesday
while riskier assets gained favor after a report showed that
U.S. private payrolls fell much less than expected in May as
businesses reopened amid the coronavirus pandemic. 
    The yield on the benchmark 10-year note was up
8.6 basis points at 0.7656% in afternoon trading, its highest
level since April. 
    A closely watched part of the U.S. Treasury yield curve
measuring the gap between yields on two- and 10-year Treasury
notes, seen as an indicator of economic
expectations, was at 56 basis points, about 4 basis points
higher than Tuesday's close and its highest level since March.
    The trading showed investors growing hopeful the U.S.
economy will recover sooner rather than later, said Stan
Shipley, research analyst for Evercore ISI.
    "The market is saying the world isn't ending," he said,
while also noting there were fewer reports of violence overnight
in the widespread protests over the death of an unarmed black
man at the hands of police.
    Employers laid off another 2.76 million workers in May,
according to the ADP National Employment Report, well below
economists' forecast of 9 million.
    But with the data so far off the estimate, said Jim Vogel,
interest rate strategist for FHN Financial, it sent a murky
message about the state of the economy.
    "People had written off May, but now we have to take a
closer look at the baseline of what really happened," Vogel
     World shares hit three-month highs on Wednesday and the
dollar fell for a sixth day running as easing lockdowns and
hopes for more monetary stimulus gave investors confidence,
despite rising COVID-19 tolls.
    The two-year U.S. Treasury yield, which typically
moves in step with interest rate expectations, was up 3.2 basis
points at 0.1998%.
      June 3 Wednesday 2:26PM New York / 1826 GMT
 US T BONDS SEP0               175-10/32    -2-1/32   
 10YR TNotes SEP0              138-40/256   -0-180/2  
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.1525       0.1547    0.003
 Six-month bills               0.175        0.1781    0.000
 Two-year note                 99-218/256   0.1998    0.032
 Three-year note               99-160/256   0.2529    0.043
 Five-year note                99-94/256    0.3782    0.059
 Seven-year note               99-92/256    0.5937    0.076
 10-year note                  98-168/256   0.7656    0.086
 30-year bond                  92-136/256   1.5633    0.084
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
 U.S. 2-year dollar swap         7.25        -0.75    
 U.S. 3-year dollar swap         4.00        -1.25    
 U.S. 5-year dollar swap         3.50        -0.75    
 U.S. 10-year dollar swap       -1.50        -0.25    
 U.S. 30-year dollar swap      -48.75         0.50    
 (Reporting by Ross Kerber in Boston; Editing by Leslie Adler)
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