Treasuries Move To The Upside Following Jobs Data

(RTTNews) - After ending the previous session roughly, treasuries moved to the upside during trading on Friday, as traders reacted to the monthly jobs report.

Bond prices gave back ground after an early advance but remained in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.9 basis points to 4.151 percent.

With the decrease on the day, the ten-year yield fell to its lowest closing level in well over a month.

The strength among treasuries came after the Labor Department's closely watched monthly jobs report showed a bigger than expected increase in employment in November but also an uptick by the unemployment rate.

The Labor Department said non-farm payroll employment shot up by 227,000 jobs in November after rising by an upwardly revised 36,000 jobs in October.

Economists had expected employment to jump by 200,000 jobs compared to the uptick of 12,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate crept up to 4.2 percent in November from 4.1 percent in October. The modest increase matched economist estimates.

The uptick by the unemployment rate has increased confidence the Federal Reserve will lower interest rates by another 25 basis points later this month.

"Despite the strong headline number this morning, the Fed is likely to note the overall slowing in the job market and cut rates by 25 bps in 2 weeks, unless the next CPI report is white hot," said Chris Zaccarelli, Chief Investment Officer, Northlight Asset Management.

In other U.S. economic news, the University of Michigan released a report showing consumer sentiment in the U.S. has improved by slightly more than anticipated in the month of December.

The University of Michigan said its consumer sentiment index climbed to 74.0 in December from 71.8 in November. Economists had expected the index to rise to 73.0.

However, the report also said year-ahead inflation expectations jumped to 2.9 percent in December from 2.6 percent in November, reaching a six-month high.

Next week's trading is likely to be driven by reaction to reports on consumer and producer price inflation, which could impact the outlook for interest rates.