NEW YORK: US Treasury yields rose in choppy trading after European Central Bank President Mario Draghi suggested he does not anticipate deepening the ECB interest rate cuts announced on Thursday.
The ECB surprised investors with an unexpected cut of its main refinancing rate to zero from 0.05 percent. As expected, it lowered its deposit rate to -0.4 percent and raised its monthly bond purchases to 80 billion euros.
U.S. Treasury yields dipped during the ECB statement with investors adding to risk assets, but the losses quickly reversed as Draghi said that under the current perspective it would not be necessary to reduce interest rates further..
"We saw a risk-on move initially on the back of the ECB accommodation and it put Treasury prices under pressure, but the Draghi rhetoric of 'no more deep cuts' reversed that," interest rate strategist at Nomura Securities International in New York.
U.S. Treasuries were seen as responding to a big jump in European yields, which were higher as the euro rallied on the news. More monetary stimulus would be expected to keep yields lower.
The yield on the U.S. 2-year Treasury note rose to 0.934 percent, its highest since Jan. 14. It closed at 0.902 percent on Wednesday.
U.S. Treasury yields dipped during the ECB statement with investors adding to risk assets, but the losses quickly reversed as Draghi said under the current perspective it would not be necessary to reduce interest rates further..
The U.S. 3-year note yield rose to 1.12 percent, its highest since late January.
U.S. Labor Department data released on Thursday showed the number of Americans filing for unemployment benefits fell more than expected last week, hitting its lowest level since October, pointing to sustained strength in the labor market.
"The data was less relevant than this morning's ECB decision to cut rates and increase QE more dramatically than expected," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.
The benchmark 10-year note yield was last down 11/32 in price to yield 1.929 percent, up from 1.892 percent on Wednesday.
The 30-year bond was last down 13/32 in price to yield 2.703 percent, up from 2.683 percent late on Wednesday.
The Treasury will sell $12 billion of 30-year bonds later in the day.
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