By Karen Brettell
NEW YORK, Dec 5 (Reuters) - U.S. Treasuries yields rose to
three-month highs on Thursday after numbers on strong U.S.
growth and decreasing claims for unemployment benefits added to
expectations the Federal Reserve is more likely to pare bond
purchases in coming months.
The data comes a day before the November U.S. employment
report, which is expected to show that employers added 180,000
jobs in November, according to the median estimate of 90
economists polled by Reuters.
Some traders are speculating the number could come in even
stronger, with a gain of more than 200,000 jobs, and the data
could be enough for the Federal Reserve to announce a pullback
in its $85 billion-a-month bond purchase program sooner.
'The bond market is saying tapering is coming,' said Stan
Shipley, bond strategist at ISI Group in New York.
Benchmark 10-year Treasuries fell 8/32 in price
to yield 2.87 percent, the highest since Sept. 18 and breaking
above technical support at 2.85 percent.
Thirty-year bonds fell 4/32 in price to yield
Many think the central bank is most likely to begin paring
purchases in March, but an increasing number are betting on
action in January as the U.S. economic data improves. Some even
see an announcement at the Fed's Dec. 17-18 meeting as a
'There are still people interpreting that the door is still
open for a December taper,' said Sean Murphy, a Treasuries
trader at Societe Generale in New York.
A January announcement may be more likely, however, as the
Fed may be hesitant to risk hurting liquidity heading into
year-end, he added.
Data on Thursday was bullish for the economy, showing that
it grew faster than initially estimated in the third quarter as
businesses aggressively accumulated inventories, but underlying
domestic demand remained sluggish. Gross domestic product grew
at a 3.6 percent annual rate instead of the 2.8 percent pace
estimated earlier, the Commerce Department said.
Atlanta Federal Reserve President Dennis Lockhart, who does
not have a vote on the policymaking committee this year or next,
warned against attaching too much importance to the data.
'I am not prepared to interpret the revised third-quarter
number as an indication that the economy is on a much stronger
track. I think we're still on that relatively moderate growth
track,' he said on Thursday.
The number of Americans filing new claims for unemployment
benefits also unexpectedly fell last week, a hopeful sign for
the labor market recovery.
The Fed bought $1.58 billion in bonds due 2039 and 2043 on
Thursday as part of its ongoing purchase program.
(Additional reporting by Richard Leong, Editing by Nick
Zieminski and Kenneth Barry)
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Keywords: MARKETS USA BONDS/
(-------MARKET SNAPSHOT AT 11:25 a.m. EDT (1625 GMT)------- Change vs Current Nyk yield Three-month bills 0.055 (unch) 0.056 Six-month bills 0.095 (unch) 0.096 Two-year note 99-29/32 (-01/32) 0.301 Five-year note 98-30/32 (-05/32) 1.472 10-year note 99-02/32 (-06/32) 2.861 30-year bond 97-08/32 (-02/32) 3.907 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 8.75 (-0.50) U.S. 3-year dollar swap spread 11.25 (+0.25) U.S. 5-year dollar swap spread 8.75 (-0.50) U.S. 10-year dollar swap spread 7.00 (unch) U.S. 30-year dollar swap spread -8.50 (-0.25))
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