US Treasury Yields Fall Ahead of Employment Data

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Leek Karen Pierog

CHICAGO, Aug 30 (Reuters) – U.S. Treasury yields were lower on Monday, ahead of the August employment report late this week and in the face of the possibility that the data could influence the economy. at which point the Federal Reserve will begin to reduce its asset purchases.

* The yield on the 10-year bond was down 2 basis points at 1.2919%.

* Fed Chairman Jerome Powell said on Friday that the US economic recovery is ongoing, stating that there is no rush to tighten monetary policy. Regarding the reduction in asset purchases made by the central bank, he only pointed out that it could be “this year.”

* Andrew Richman, a strategist at Sterling Capital Management, said Friday’s jobs report could help influence the Fed’s decision on when to announce plans to decrease asset purchases.

* “I think the number might move the scale a bit one way or another here,” he said. “If we get a very, very strong number this Friday, you are more likely to hear a reduction announcement in September.”

* Otherwise, Richman added, expect a “pretty quiet week overall” in Treasuries as the market heads into the Labor Day holiday weekend.

* The yield on the 5-year note, which is more sensitive to increases in intermediate interest rates, fell 1.2 basis points to 0.7883%. It touched a more than seven-week high of 0.864% on Friday.

* The yield differential between 2- and 10-year papers flattened 1.29 basis points to 107.68 points.

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