US bond yield moves muted

The yield on the US benchmark government bond moved within a range of three basis points on Thursday, continuing a trend of muted fluctuation in the week ahead of Friday's payrolls data. Yields remained range-bound this week amid fears of a trade war, the resignation of Gary Cohn, the top economic adviser to US President Donald Trump, and news the European Central Bank on Thursday dropped a long-standing pledge to increase its bond buying if needed.
Despite a choppy trading session, yields on Thursday remained steady, with Treasury traders "waiting somewhat patiently ahead of payrolls tomorrow, not wanting to push the market in too big of a direction ahead of important data," said Gene Tannuzzo, senior portfolio manager at Columbia Threadneedle Investments in Minneapolis. The 10-year Treasury yield opened Monday at 2.850 percent, and was last up 0.7 basis points at 2.857 percent. The spread between the weekly high and low was 9.6 basis points, the high of 2.906 percent hit on Tuesday and the low of 2.810 percent hit Monday.
According to a Reuters survey of economists, the Labor Department's closely followed employment report will likely show that nonfarm payrolls increased by 200,000 jobs last month, matching January's gains. The unemployment rate is forecast to have fallen one-tenth of a percentage point to 4.0 percent, which would be the lowest level since December 2000. "We're a little below consensus," said Ethan Harris, chief economist at Bank of America Merrill Lynch, "with overall payrolls up only 160,000." The bank's forecast is based on a soft read from a proprietary indicator that uses direct deposit check data.
The 10-year Treasury yield fell in late-morning trade as the market digested news that the European Central Bank dropped its easing bias. The initial release of the ECB statement pushed up the benchmark yield, tracking its German counterpart. However, both fell during Draghi's subsequent news conference, during which he noted that euro zone inflation remained stubbornly low, and said "Our mandate is in terms of price stability. Victory cannot be declared yet."
But the US yield moves were muted in comparison to the German ones. The jump in Bund yields compared with the Treasuries' move helped shrink the spread between the two The spread between German and US benchmark bond yields hit a session high of -218.60 above Wednesday's close at -221.0.
The 10-year yield was last at 2.857 percent, below Wednesday's close at 2.883 percent. The two-year yield was last at 2.250 percent below its last close at 2.254 percent. The 30-year yield was last at 3.123 percent, 2.8 basis points below Wednesday's close.