Yields up on record job openings, $144 billion of supply

(Recasts to add job openings; updates rates, analyst quotes)

By Kate Duguid

NEW YORK, Sept 11 (Reuters) - U.S. Treasury bond yields rose on Tuesday following a report of a record number of job openings in July as $144 billion in new supply on offer this week weighed on prices. The Labor Department's monthly Job Openings and Labor Turnover Survey, or JOLTS, released on Tuesday showed openings surged to a record high in July and more Americans voluntarily quit their jobs, pointing to sustained labor market strength and confidence that could soon spur faster wage growth.

Job openings, a measure of labor demand, increased by 117,000 to a seasonally adjusted 6.9 million in July. That was the highest level since the series started in December 2000.

"The JOLTS data was absolutely outstanding today, it was the best I've seen in my life," said John Herrman, director, U.S. rates strategies at MUFG Securities.

The market will be watching the release of consumer price index data on Thursday to see if it confirms the increased inflation expectations suggested by the JOLTS numbers and wage gains reported on Friday.

The two-year yield, which reflects market expectations of Fed interest rate hikes, hit a decade peak on Tuesday for the third day in a row at a yield of 2.752 percent, the highest since July 2008.

Yields at the short end of the curve increased despite Tuesday's auction of three-year notes, the largest amount on offer since 2010. New supply of Treasuries has increased sharply in 2018 as the Federal Reserve has reduced its bond buying and the Treasury has issued new debt to pay for President Donald Trump's $1.5 trillion tax cut.

Tuesday's auction drew average demand, with the ratio of bids to the amount of three-year debt offered - an indicator of overall enthusiasm - at 2.68, higher than the 2.65 in August but well below the average of 2.98.

"We do have big auctions - so there is some supply concern. But in general, the economic data just continues to be very constructive... The data is becoming more and more convincing of two more Fed hikes this year," said Herrman.

On Wednesday, $23 billion in 10-year notes will be on offer and on Thursday, $15 billion of 30-year notes.

At 3:31 p.m. ET (19:32 p.m. GMT), the 10-year yield was 2.981 percent, up from a high on Monday of 2.950 percent. The 30-year yield was also up, last at 3.127 percent.

(Reporting by Kate Duguid; Editing by Dan Grebler)

First Published: 2018-09-11 16:42:13
Updated 2018-09-11 21:48:23


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