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US Treasurys mixed; rate outlook in focus

Bartomeu Amengual | age fotostock | Getty Images. U.S. Treasury yields crept up on Tuesday, pushing prices down as a generally firm tone in global stock markets dented the appeal of safe haven debt.

U.S. Treasurys were higher on Monday, with sentiment cautious after Friday's stronger-than-expected jobs data triggered a fresh wave of selling in bond markets.

News that the U.S. economy created 280,000 jobs in May, beating analyst expectations for a rise of 225,000, raised the prospect of a Federal Reserve interest-rate hike this year.

The 10-year Treasury (U.S.: US10Y) yield traded at about 2.38 percent on Monday, down from 2.40 percent in late New York trade on Friday but holding near an eight-month high hit that session.

Yields at the short-end of the curve edged down after rising earlier, with two-year yields at 0.7088 percent compared with 0.71 percent late on Friday, reflecting nervousness about the U.S. rate outlook.

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"It's all change in sentiment in new directions this morning. The strength of Friday's U.S. payrolls number and stronger Chinese trade surplus numbers should be a wake-up call to the growth naysayers," Bill Blain, a strategist at Mint Partners in London, said in a note on Monday.

He was referring to data on Monday that showed China posted a near-record trade surplus in May at $59.49 billion, although imports tumbled 17.6 percent from a year earlier - highlighting a slowdown in consumer spending.

"Treasuries are down and the dollar is up. The talking heads are now confidently predicting a September Fed hike, and the smarter ones wondering how much," Blain wrote.

Analysts said that in the wake of the upbeat payrolls number, U.S. retail sales data on Thursday will be watched closely for further clues on when to expect a rate rise.

German Bunds, a key driving factor behind the U.S. Treasury market in recent weeks, remained in focus.

The yield on the 10-year German Bund, the benchmark in Europe, rose as high as 0.87 percent on Monday after data showed German industrial output rose a higher-than-expected 0.9 percent in April.

Elsewhere, U.S. stock futures pointed to flat to slightly weak open for Wall Street shares while European shares were broadly lower.



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