Treasuries Regain Ground Following Monthly Jobs Report

(RTTNews) - Treasuries moved notably higher over the course of the trading day on Friday, regaining some ground after trending lower over the past few weeks.

Bond prices showed a strong move to the upside in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.3 basis points to 2.312 percent.

With the drop on the day, the ten-year yield pulled back off the one-month closing high that was set in the previous session.

The strength among treasuries came following the release of a report from the Labor Department showing weaker than expected job growth in the month of October.

The Labor Department said non-farm payroll employment rose by 214,000 jobs in October compared to economist estimates for an increase of about 235,000 jobs.

Nonetheless, the job growth helped push the unemployment rate down to 5.8 percent in October from 5.9 percent in September. With the drop, the unemployment rate hit its lowest level since July of 2008.

While some analysts said the drop in the unemployment rate points to a near-term interest rate hike, tame wage growth seemed to offset any interest rate concerns among bond traders.

Paul Ashworth, Chief U.S. Economist at Capital Economics, described the rally by treasuries in response to the report as "badly misplaced."

"This is a strong report that suggests the first rate hike is coming soon," Ashworth said. "We expect the Fed to start tightening in March next year."

The U.S. economic calendar for next week is relatively quiet amid the Veterans Day holiday on Tuesday, although traders are likely to keep an eye on reports on weekly jobless claims, retail sales, and consumer sentiment.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury is due to sell $26 billion worth of three-year notes next Monday, $24 billion worth of ten-year notes next Wednesday and $16 billion worth of thirty-year bonds next Thursday.