Interest Rate Worries Continue To Weigh On Treasuries After Jobs Data

(RTTNews) - Following the release of closely watched monthly employment data, treasuries moved lower for the third straight session on Friday.

Bond prices moved notably lower early in the session and remained firmly negative throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.7 basis points to 3.883 percent.

The continued weakness among treasuries came as the Labor Department's monthly jobs report failed to ease concerns about the outlook for interest rates.

The report showed U.S. job growth slowed in the month of September but still came in slightly stronger than economists had anticipated.

The report showed non-farm payroll employment jumped by 263,000 jobs in September after surging by an unrevised 315,000 jobs in August and spiking by an upwardly revised 537,000 jobs in July. Economists had expected employment to leap by 250,000 jobs.

The slightly stronger than expected job growth reflected notable increases in employment in the leisure and hospitality and healthcare sectors, which added 83,000 jobs and 75,400 jobs, respectively.

Economists noted the job growth was even stronger excluding a drop in state and local government education payrolls, which reflected shifting seasonal patterns in teacher hiring.

The Labor Department also said the unemployment rate dipped to 3.5 percent in September from 3.7 percent in August, while economists expected the unemployment rate to come in unchanged.

The unemployment rate matched its lowest level since just before Covid-19 lockdowns began to take effect in February of 2020, which was also matched in July. Unemployment has not been lower in over fifty years.

"The drop in the unemployment rate back to a cycle low underscores that the labor market remains extremely tight," said Kathy Bostjancic, Chief U.S. Economist at Oxford Economics. "The Fed will view the jobs report as a reason to continue its aggressive pace of tightening."

Next week's trading is likely to be driven by reaction to the latest inflation data, while reports on retail sales and consumer sentiment may also attract attention.