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11/02 10:20A (RT)US T-bond down point,
investors shift to front endStory 2745 (I/US, I/DBT, I/GVD, I/MMT, I/USC,
I/INT, M/US, H/) NEW YORK, Nov 2 (Reuters) - The 30-year
U.S. Treasury bondextended losses to a full point on Friday at mid-morning
asinvestors moved to shorter maturities, positioning themselvesfor
steeper Federal Reserve rate cuts following a very weakOctober U.S.
employment report. "After two days of a very large move up
because (theTreasury Department) eliminated the long bond, bonds are
downsharply as investors move to the front end," said Chris Rupkey,vice
president and senior financial economist at Bank ofTokyo/Mitsubishi. "The
curve flattening trade is being reversedwith a vengeance. As a result, bonds
are underperforming." At 10:10 a.m. EST(1510 GMT), the
30-year Treasury bond,slated for extinction by the U.S. Treasury Department,
was off 1-11/32 to 107-20/32, yielding 4.88 percent. In
contrast,two-year notes <US2YT=RR> were up 3/32 at 100-19/32,
yielding2.43 percent. The Labor Department said U.S.
payrolls shed 415,000 jobsin October while the unemployment rate rose to 5.4
percent from4.9 percent in September. Analysts had estimated U.S.
payrollsshed 289,000 jobs in October and that the unemployment ratewould
rise to 5.2 percent. "The employment data was so off the
charts that the odds ofa 50-basis-point move have gone up quite
dramatically," Rupkeysaid. "The job losses are too great. Traders are afraid
of whatthe Fed will do so the dominant trade is a curve
steepener." (( E. Freilich, U.S. Financial Markets
646-223-6300)) REUTERSRtr 10:20
11-02-01
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