LONDON: US Treasury prices were flat on Friday ahead of a widely watched US jobs data release and were seen sticking to recent ranges, while the market showed little reaction to a Greek debt restructuring that analysts said had been widely priced in.
Ten-year US Treasury yields were flat at 2.01 percent, within a range of 1.79 percent to 2.17 percent held since November. Thirty-year US Treasury yields were little changed at 3.17 percent.
The US economy is expected to have created 210,000 jobs last month, according to a Reuters survey, following January's tally of 243,000. The unemployment rate is expected to have held at a three-year low of 8.3 percent.
Even a disappointing sub-200,000 figure for non-farm payrolls would not be enough to get 10-year yields back through 1.79 percent, said Craig Collins, trader at Bank of Montreal.
"What gets us to break that? Inflation fears could have yields testing the upper band, or at a lower band what would get us there is possibly heating up of tensions in the Middle East,@ Collins said. "You are going to need a game-changer to break out the range and I don't expect that to happen in the near term." He saw yields in an even tighter range of 2.05-1.90.
Safe-haven US government bond prices, like their German counterparts, showed little reaction to Greece's successful debt restructuring which allowed it to avert an imminent, messy default.
The International Swaps and Derivatives Association said it will meet on Friday at 1300 GMT to decide whether Greek credit default swaps will pay out, after Greece said it intended to use "collective action clauses" to secure a bigger participation of private creditors in the debt exchange. The finance ministry said creditors had tendered 85.8 percent of the 177 billion euros in bonds regulated by Greek law.
"We think that the dangers posed by a CDS payout are over-hyped. But nonetheless it is something over which there may be some market concern, so if that (happens) Treasuries would benefit," said Philip Shaw, chief economist at Investec.
To break recent ranges you would need "either a significant landmark event or a consistent run of US economic data which changes the market's perception of the strength of the recovery," he said. "That's unlikely to occur either from one specific payroll number or indeed from a decision on the Greek CDS payout."
Copyright Reuters, 2012
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