NEW YORK, April 15 (Reuters) - U.S. Treasuries rose on Thursday as dour labor market news overshadowed signs of improvement elsewhere in the economy, while worries spurred by Greece's debt crisis added to the allure of safe-haven assets.
Regional U.S. manufacturing surveys showed surprising strength this month, but an unexpected rise in claims for jobless benefits called into question the vigor of the economic recovery. For details see
Lack of strong job growth will help keep inflation under control, which bodes well for bond prices even though a bubbling stock market rally has threatened to draw cash out of Treasuries.
The general bearishness on Greece and continuing doubts over whether it will finally seal emergency money from the euro zone and International Monetary Fund supported investors' search for safe harbors such as Treasuries. For more on Greece see
'The economy is doing better but then the Greece and some of the labor market uncertainty support the bullish bond camp,' said Kim Rupert, managing director of global fixed income analysis at Action Economics LLC in San Francisco.
'It is just still very unsettled and we have very divergent opinions on where we are headed and so that keeps the Treasury market well bid on some occasions and we see better selling pressure on others.'
Benchmark 10-year Treasury notes were trading 6/32 higher in price to yield 3.84 percent, down from 3.87 percent at Wednesday's close.
Two-year notes were 2/32 higher to yield 1.03 percent versus Wednesday's close of 1.06 percent.
BUOYANT STOCKS
While prices rose, Treasuries remain stuck in a very tight range and dealers say the market's focus is rather on buoyant equities and the company earnings season.
'With earnings season in full focus and stocks (recently) in rally mode, the bond market could become a side show for now,' said George Goncalves, fixed income strategist at Nomura Securities International in New York.
There is also the underlying uncertainty of a cloudy economic outlook and the suspicion that there are new chapters to be written in the story of the 2-1/2-year-old global credit crisis.
Investors are concerned that Greece's troubles could be a harbinger of problems elsewhere and markets looked to have been comforted only marginally by moves interpreted as being the first steps toward Athens activating a bailout package.
The country's request to start talks with the European Central Bank, IMF and EU reduced its cost of issuing debt, but its spread over German government bonds is still more than three times that of Portugal or Ireland.
'Because the (Greek debt crisis) just seems to keep coming back, there doesn't seem to be a resolution, that uncertainty is definitely worrying to the marketplace, and there is also the knowledge that there may be more countries with issues lining up behind Greece,' David Coard, head of fixed income sales and trading at Williams Capital Group in New York.
(Additional reporting by Chris Reese; editing by Patrick Graham) (burton.frierson@thomsonreuters.com;+1 646-223-6292; Reuters Messaging: burton.frierson.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.
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