September 6, 2018 / 6:10 PM / 2 months ago

TREASURIES-Yields fall on safety buying as stocks drop

(Recasts with bond rally, adds quotes, updates price)

* Bonds gain as stocks, emerging markets weaken

* Jobs report on Friday in focus

* Trade tensions with China, Canada in focus

By Karen Brettell

NEW YORK, Sept 6 (Reuters) - U.S. Treasury yields fell on Thursday on safety buying as stocks dropped and as investors saw recent weakness in bonds driven by heavy corporate issuance as an opportunity to add positions at higher yields.

World shares fell for a fifth straight day, with emerging market stocks in their sixth day of declines.

“A portion of (the Treasury rally) is supported by the general 'risk off' move across all risk assets,” said Mike Lorizio, head of Treasuries trading at Manulife Asset Management in Boston.

Higher yields after a week of heavy corporate debt issuance also enticed some buyers into the bonds.

“There are some participants that felt like the 7- to 30-year part of the curve has absorbed such an impact from this excessive issuance that it now presents as a buying opportunity,” Lorizio said.

Benchmark 10-year notes rose 8/32 in price to yield 2.873 percent, down from 2.902 percent on Wednesday.

The next economic focus for investors is Friday’s U.S. employment report for August, which will be evaluated for further indications on wage inflation and the strength of the labor market.

U.S. private employers added 163,000 jobs during August, according to the ADP National Employment Report on Thursday.

“It was a little bit less than consensus but the general trend seems to be a continued pickup in jobs,” said Subadra Rajappa, head of U.S. rates strategy at Societe Generale in New York.

Other data showed that the number of Americans filing for unemployment benefits fell to near a 49-year low last week.

“Generally the data is on the positive side,” Rajappa said.

Trade tensions remained in view, with U.S. President Donald Trump gearing up to impose tariffs on $200 billion in Chinese goods and Beijing certain to retaliate against any measures.

Investors were also watching for developments as the United States and Canada resume talks about revamping the North American Free Trade Agreement. Canada insisted there was room to salvage the pact despite few signs a deal was imminent.

The U.S. Treasury said on Thursday that it will sell $73 billion in notes and bonds next week including $35 billion in three-year notes, $23 billion in 10-year notes and $15 billion in 30-year bonds. (Editing by Meredith Mazzilli) )

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