By Emily Flitter
NEW YORK, Feb 3 (Reuters) - U.S. Treasury prices fell on Wednesday, with the 30-year Treasury bond dropping nearly a point as fears of sovereign risk in Europe faded and investors turned their focus to the possibility of better-than-forecast jobs data later in the week.
The 30-year bond fell 30/32 to yield 4.63 percent. The benchmark 10-year Treasury note was down 15/32 to yield 3.71 percent, up from 3.63 percent on Tuesday.
'The back end of the (yield) curve is a little bit victim to supply coming up and the possibility of a higher- or better-than-expected nonfarm payroll,' said Christian Cooper, an interest-rate strategist at RBC Capital Markets in New York.
'The risk is starting to become that if nonfarm payrolls prints 50,000 or 60,000, that could really steepen the curve,' he said. 'The downside to that, a weaker-than-expected print of the same magnitude, would not nearly change the market as much.'
Investors began to perceive greater possibility of surprisingly good jobs data, which would signal a stronger economic recovery and higher inflation, after an indicator released on Wednesday showed private U.S. employers cut 22,000 jobs in January. The decline was smaller than the 61,000 jobs lost in December, according to the ADP National Employment Report. For more, click on
'A lot of guys think the ADP is a harbinger, so maybe there's a chance that Friday's nonfarm payrolls could be a slight positive,' said Michael Skinner, a bond trader at Wall Street Access in New York.
The median forecast in a Reuters survey for nonfarm payrolls is for an increase of 5,000 jobs when the U.S. Labor Department reports January figures on Friday.
Wednesday's ADP report was followed by the latest services sector readings from the Institute for Supply Management. The group said its employment index on the sector rose to the highest level since August 2008.
The overall index climbed to 50.5 in January, up slightly from December but a tad below analysts' forecast.
Some investors also began selling bonds to make room for next week's U.S. government debt sales.
The Treasury Department said it will sell $81 billion of new notes next week as part of its quarterly refunding. .
The refinancing will be comprised of $40 billion of three-year notes, $25 billion of 10-year notes and $16 billion of 30-year bonds. The government also said the issuance of Treasury Inflation-Indexed Protected Securities will gradually increase.
Treasury price declines were restricted earlier in the session by concerns about fiscal pressures mounting in Greece and their potential impact on other euro-zone economies such as Spain and Portugal. The cost to insure against government debt defaults by Spain and Portugal spiked higher.
But an announcement by Moody's Investor Services that the ratings agency was not putting its AAA rating of Spain under review 'let the air out' of earlier speculation, said Kedric Dines, head of interest rate and commodity derivatives sales at Mizuho Corporate Bank in New York.
Lighter volume also contributed to the last leg of the drop, analysts said. Treasury trading was running about 19 percent below its recent average at midday, according to ICAP.
Major U.S. stock indices, whose declines had kept bond losses in check, regained some ground late in the session from earlier lows.
(Additional reporting by Tom Ryan and Richard Leong, Editing by Dan Grebler) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) Keywords: MARKETS BONDS -------MARKET SNAPSHOT AT 2:41 p.m. EST (1941 GMT)------- Change vs Current Nyk yield Three-month bills 0.1 (+0.00) 0.101 Six-month bills 0.1675 (+0.00) 0.169 Two-year note 99-32/32 (-02/32) 0.879 Five-year note 99-09/32 (-07/32) 2.405 10-year note 97-11/32 (-17/32) 3.703 30-year bond 95-30/32 (-1-06/32) 4.628 Keywords: MARKETS BONDS (emily.flitter@thomsonreuters.com; +1-646-223-6310; Reuters messaging; emily.flitter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
NEW YORK, Feb 3 (Reuters) - U.S. Treasury prices fell on Wednesday, with the 30-year Treasury bond dropping nearly a point as fears of sovereign risk in Europe faded and investors turned their focus to the possibility of better-than-forecast jobs data later in the week.
The 30-year bond fell 30/32 to yield 4.63 percent. The benchmark 10-year Treasury note was down 15/32 to yield 3.71 percent, up from 3.63 percent on Tuesday.
'The back end of the (yield) curve is a little bit victim to supply coming up and the possibility of a higher- or better-than-expected nonfarm payroll,' said Christian Cooper, an interest-rate strategist at RBC Capital Markets in New York.
'The risk is starting to become that if nonfarm payrolls prints 50,000 or 60,000, that could really steepen the curve,' he said. 'The downside to that, a weaker-than-expected print of the same magnitude, would not nearly change the market as much.'
Investors began to perceive greater possibility of surprisingly good jobs data, which would signal a stronger economic recovery and higher inflation, after an indicator released on Wednesday showed private U.S. employers cut 22,000 jobs in January. The decline was smaller than the 61,000 jobs lost in December, according to the ADP National Employment Report. For more, click on
'A lot of guys think the ADP is a harbinger, so maybe there's a chance that Friday's nonfarm payrolls could be a slight positive,' said Michael Skinner, a bond trader at Wall Street Access in New York.
The median forecast in a Reuters survey for nonfarm payrolls is for an increase of 5,000 jobs when the U.S. Labor Department reports January figures on Friday.
Wednesday's ADP report was followed by the latest services sector readings from the Institute for Supply Management. The group said its employment index on the sector rose to the highest level since August 2008.
The overall index climbed to 50.5 in January, up slightly from December but a tad below analysts' forecast.
Some investors also began selling bonds to make room for next week's U.S. government debt sales.
The Treasury Department said it will sell $81 billion of new notes next week as part of its quarterly refunding. .
The refinancing will be comprised of $40 billion of three-year notes, $25 billion of 10-year notes and $16 billion of 30-year bonds. The government also said the issuance of Treasury Inflation-Indexed Protected Securities will gradually increase.
Treasury price declines were restricted earlier in the session by concerns about fiscal pressures mounting in Greece and their potential impact on other euro-zone economies such as Spain and Portugal. The cost to insure against government debt defaults by Spain and Portugal spiked higher.
But an announcement by Moody's Investor Services that the ratings agency was not putting its AAA rating of Spain under review 'let the air out' of earlier speculation, said Kedric Dines, head of interest rate and commodity derivatives sales at Mizuho Corporate Bank in New York.
Lighter volume also contributed to the last leg of the drop, analysts said. Treasury trading was running about 19 percent below its recent average at midday, according to ICAP.
Major U.S. stock indices, whose declines had kept bond losses in check, regained some ground late in the session from earlier lows.
(Additional reporting by Tom Ryan and Richard Leong, Editing by Dan Grebler) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com) Keywords: MARKETS BONDS -------MARKET SNAPSHOT AT 2:41 p.m. EST (1941 GMT)------- Change vs Current Nyk yield Three-month bills 0.1 (+0.00) 0.101 Six-month bills 0.1675 (+0.00) 0.169 Two-year note 99-32/32 (-02/32) 0.879 Five-year note 99-09/32 (-07/32) 2.405 10-year note 97-11/32 (-17/32) 3.703 30-year bond 95-30/32 (-1-06/32) 4.628 Keywords: MARKETS BONDS (emily.flitter@thomsonreuters.com; +1-646-223-6310; Reuters messaging; emily.flitter.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.