TREASURIES-Yields mixed after below-expectations jobs report

       By Karen Pierog
    CHICAGO, Dec 3 (Reuters) - U.S. Treasury yields were mixed
in choppy trading on Friday after initially falling on closely
watched jobs data that showed employment increased far less than
expected in November, but was not seen as a game changer for the
Federal Reserve.
    The benchmark 10-year yield, which briefly fell
to a session low of 1.407% with the jobs report release, was
last down less than a basis point at 1.4427%. Yields move
inversely to prices.
    The two-year yield, which reflects short-term
interest rate expectations, tumbled as low as 0.587%. It was
last up 2.4 basis points at 0.6429%.
    Nonfarm payrolls increased by 210,000 jobs last month, while
the unemployment rate dropped to 4.2%, the lowest since February
2020, from 4.6% in October, the U.S. Labor Department reported.
    Economists polled by Reuters had forecast payrolls advancing
by 550,000 jobs. Estimates ranged from as low as 306,000 to as
high as 800,000 jobs.
    Kevin Flanagan, head of fixed income strategy at WisdomTree
Investments, said the market had a knee-jerk reaction to the
Labor Department report that initially pushed yields down.
    "On the surface, the numbers came in disappointing because
they did not match expectations, but it was not a weak report."
    As for the Fed's plans to begin tapering its bond purchases,
Flanagan said the report might allow the central bank to maybe
delay increasing the pace of the taper until January.
    "Perhaps this gives the Fed a little bit of a breathing
room, but it doesn't change the overall calculus. They will
speed up the taper programs and more than likely raise rates in
the second half of next year," he said.
    Other data on Friday showed U.S. services industry activity
unexpectedly rose in November, hitting a fresh record high as
businesses boosted hiring, but there was little sign that supply
constraints were easing and prices remained high.
    The closely watched gap between two-year and 10-year note
yields narrowed to 78.80 basis points, the lowest
since January. It was last down 3 basis points at 79.70 basis
    The five-year note and 30-year bond yield
curve was largely unchanged at 55 basis points.
    December 3 Friday 10:14AM New York / 1514 GMT
                               Price        Current   Net
                                            Yield %   Change
 Three-month bills             0.0525       0.0532    0.000
 Six-month bills               0.0975       0.0989    0.005
 Two-year note                 99-184/256   0.6429    0.024
 Three-year note               99-136/256   0.9118    0.017
 Five-year note                100-46/256   1.2127    0.003
 Seven-year note               100-194/256  1.3858    -0.006
 10-year note                  99-96/256    1.4427    -0.006
 20-year bond                  102-132/256  1.8486    -0.004
 30-year bond                  102-160/256  1.7618    -0.006

                               Last (bps)   Net
 U.S. 2-year dollar swap        23.25         0.75
 U.S. 3-year dollar swap        23.25         1.50
 U.S. 5-year dollar swap        11.25         0.75
 U.S. 10-year dollar swap        8.50         1.75
 U.S. 30-year dollar swap      -13.75         2.25

 (Reporting by Karen Pierog
Editing by Mark Heinrich)

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