NEW YORK: US Treasuries yields rose on Thursday in choppy trading after the European Central Bank cut interest rates to record lows and announced new measures meant to help stimulate the region's economy.
The cut, the first time the ECB has deployed a negative deposit rate which effectively charges banks to deposit overnight, was a response to a slowdown in inflation far below the ECB's target and to weak euro zone lending.
The ECB added that it will offer banks a targeted long-term refinancing operation (LTRO) to persuade them to lend, was preparing to purchase asset-backed securities in future and will discontinue sterilizing previous bond purchases.
Treasuries yields had fallen before the ECB announcement on strong overnight demand for US bonds from Japanese investors, said traders.
Benchmark 10-year notes were last up 1/32 in price to yield 2.60 percent, up from 2.58 percent before the ECB's decision.
Treasuries yields rose in line with German government debt yields, which jumped after the announcement.
"It probably puts pressure on US rates to the extent that it's putting pressure on risk-free rates in Europe," said Chris Diaz, a portfolio manager at Janus Global Bond Strategy in Denver, Colorado.
The next major focus for the market will be Friday's payrolls report for May. It is expected to show that employers added 218,000 people to payrolls, according to the median estimate of 105 economists polled by Reuters.
The Federal Reserve will buy between $2.25 billion and $2.75 billion in notes due from 2021 to 2024 on Thursday as part of its ongoing purchase program.
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