Categories: विदेश

TREASURIES-US yields drift higher as shutdown postpones key jobs report

* Government shutdown delays key labor data release * ISM data adds evidence of sluggish labor market * Fed officials show diverse views on interest rate path * Profit-taking likely behind uptick in yields (Adds analyst comments, context, graphic; updates market levels) By Davide Barbuscia NEW YORK, Oct 3 (Reuters) – U.S. Treasury yields moved marginally higher in thin trading on Friday, as the postponement of key labor data because of the U.S. government shutdown left the market without much directional conviction. With the U.S. government shutting down on Wednesday after lawmakers failed to reach a funding deal, the Labor Department halted the release of a monthly jobs report, scheduled for Friday, that was crucial for the Federal Reserve and for investors to assess the health of the U.S. economy and the direction of interest rates. That left market participants scrambling to get a picture of the economy, using alternative estimates and private surveys released earlier this week that continued to point to a gradual slowdown in the jobs market. "We're stuck in a world where we have to live with the private data and not the government data, and so that causes a good deal of uncertainty around what we should be doing directionally," said Art Hogan, chief market strategist at B. Riley Wealth. The most-watched data point on Friday was the Institute for Supply Management's release of the September Services Purchasing Managers’ Index (PMI). It showed services sector activity stalled in September amid a slowdown in new orders, while subdued employment added to evidence of sluggish labor market conditions. Treasury yields, which move inversely to prices, were not much changed after the ISM data, except for a brief drop in two-year yields. Friday's bearish uptick in yields was likely also due to the risk-on mood in stocks, which edged higher, said John Canavan, lead U.S. analyst at Oxford Economics. "Maybe that risk-on mood is lending itself to some small Treasury selling," he said. Investors were also likely exiting positions and locking in gains ahead of the weekend after bonds rallied in recent days. "(With) the risk that an exit strategy to the government shutdown could potentially develop over the weekend … there may be some unwinding of a small safety demand Treasuries have seen this week as well, so that's another factor that could be nudging rates a little bit higher," said Canavan. Comments from Fed officials on Friday showed a diversity of views within the central bank on the likely path of interest rates. Chicago Fed President Austan Goolsbee on Friday said he was hesitant to commit to a series of interest rate cuts with inflation still running above the central bank's 2% target. On the other hand, Fed Governor Stephen Miran, a top economic advisor to President Donald Trump, argued for much easier monetary policy. Rates futures traders on Friday were assigning a 97% probability to a 25-basis-point interest rate cut by the Fed later this month, CME Group data showed. Benchmark 10-year yields were last at 4.115%, about two and a half basis points higher on the day, while two-year yields stood at 3.569%, two points higher. Still, the uptick in yields on Friday was marginal, said Hogan. "It's one of those weeks where you have to look at the range versus the daily change in basis points, and the range seems to be lower," he added. Since the beginning of the shutdown, 10-year and two-year yields have decreased by over three basis points. Besides the uncertainty due to lack of official data, the shutdown itself could reduce economic growth by 0.1 to 0.2 percentage point for every week the government is closed, S&P Global Ratings Economics estimated. (Reporting by Davide Barbuscia; Editing by Andrea Ricci and Nick Zieminski)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)

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