Yields climb as easing trade fears boosts risk appetite

NEW YORK: US Treasury yields rose to one-week highs on Thursday as investors piled back into equities as reduced fears of a trade war drove up the appetite for risk, and ahead of Friday's closely watched employment report for March.

World stocks rose as the United States voiced a willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed US tariffs on $50 billion in Chinese goods by targeting key American imports.

"The trade wars aren't escalating, at least not right now, there's a little bit more of a risk appetite around the globe," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.

Benchmark 10-year notes fell 9/32 in price to yield 2.821 percent, after earlier rising to 2.834 percent, the highest level since March 27.

The Commerce Department on Thursday reported the US trade deficit increased to a near 9-1/2-year high in February as both exports and imports rose to record peaks, but the shortfall with China narrowed sharply.

This week's major economic catalyst will be Friday's closely watched US jobs report, which will be evaluated for accelerating jobs gains and wage pressures.

The US economy added the biggest number of jobs in more than 1-1/2 years in February, at 313,000 jobs.

Analysts noted that March's jobs gains often disappoint. The month was marked by several weather disruptions in densely populated regions, which could hurt jobs growth and increase wage pressures.

"The rates market are much more sensitive to average hourly earnings (AHE), and in months in which there are large numbers of individuals out of work for weather reasons AHE tends to be biased upwards," said Guy LeBas, chief fixed income strategist at Janney Montgomery Scott in Philadelphia.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 195,000 in March.

The ADP National Employment Report on Wednesday showed employers added 241,000 jobs in March.

Also on Friday, Federal Reserve Chairman Jerome Powell is due to speak about the economic outlook at an event in Chicago.