Treasuries Close Roughly Flat After Early Volatility

(RTTNews) - After seeing early volatility in reaction to the monthly jobs report, treasuries turned in a lackluster performance for much of the trading session on Friday.

Bond prices spent most of the day lingering near the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.089 percent.

The slight decrease still extended a recent downward trend for the ten-year yield, which slipped to its lowest closing level in over a month.

The early volatility came as the Labor Department's closely watched report showed stronger than expected job growth in February but also notable downward revisions to job growth in the two previous months.

The Labor Department said non-farm payroll employment surged by 275,000 jobs in February, while economists had expected employment to jump by 200,000 jobs.

However, the report also said job growth in December and January was downwardly revised to 290,000 and 229,000 jobs, respectively, reflecting a net downward revision of 167,000 jobs.

The Labor Department also said the unemployment rate rose to 3.9 percent in February from 3.7 percent in January. Economists had expected the unemployment rate to come in unchanged.

The downward revisions and the unexpected increase in the unemployment rate combined with a slowdown in the annual rate of wage growth added to optimism the Federal Reserve will begin lowering interest rates in June.

Trading activity waned as the day progressed, however, as traders seemed reluctant to make significant moves ahead of the release of key inflation data next week that could have a more profound impact on the outlook for rates.

While the consumer and producer price inflation data is likely to be in the spotlight next week, traders are also likely to keep an eye on reports on retail sales, industrial production and consumer sentiment.