With traders reacting to the disappointing monthly jobs report, treasuries saw considerable strength during an abbreviated trading session on Friday.
Bond prices moved sharply higher in early trading and continued to perform well throughout the trading day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 12.6 basis points to 2.05 percent.
The strength among treasuries came following the release of a report from the Labor Department showing much weaker than expected job growth in the month of March.
The report showed that non-farm payroll employment increased by 120,000 jobs in March following an upwardly revised increase of 240,000 jobs in February. Economists had expected the addition of about 201,000 jobs compared to the increase of 227,000 jobs that had been reported for the previous month.
Despite the weaker than expected job growth, the unemployment rate unexpectedly edged down to 8.2 percent in March from 8.3 percent in February.
With the unexpected drop, the unemployment rate fell to its lowest level since coming in at 7.8 percent in January of 2009.
However, James Knightley, senior economist at ING, noted that the drop in the unemployment rate was "only caused by the size of the workforce falling by less than the drop in the number of people unemployed, with household employment down 31,000."
While continued reaction to the monthly jobs report is likely to drive trading early next week, reports on the U.S. trade deficit, consumer sentiment, and producer and consumer price inflation are likely to be in focus later in the week.
Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.
The Treasury is due to auction $32 billion worth of three-year notes next Tuesday, $21 billion worth of ten-year notes next Wednesday, and $13 billion worth of thirty-year bonds next Thursday.
by RTT Staff Writer
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