Treasuries Regain Ground Following Upbeat Jobs Data
Following the sell-off seen in the previous session, treasuries regained some ground over the course of the trading day on Friday. Bond prices moved to the upside in morning trading before moving roughly sideways in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.5 basis points to 2.275 percent. The ten-year yield partly offset the 15.2 basis point jump seen on Thursday but remains well above the one-month closing low it set on Tuesday. The rebound by treasuries came as traders went bargain hunting even amid the release of a Labor Department report showing stronger than expected job growth in the month of November. The report said non-farm payroll employment jumped by 211,000 jobs in November compared to economist estimates for an increase of about 190,000 jobs. Job growth in September and October was also upwardly revised to 145,000 jobs and 298,000 jobs, respectively, reflecting 35,000 more jobs than previously reported. The Labor Department also said the unemployment rate held at the more than seven-year low of 5.0 percent set in the previous month, matching expectations. The stronger than expected job growth further cemented expectations the Federal Reserve will raise interest rates later this month, although the pace of monetary policy normalization is expected to be gradual. Joel L. Naroff, President and Chief Economist at Naroff Economic Advisors, said, "There really is nothing except a major crisis that will stop the Fed from its appointed first round of rate hikes." "All it would have taken is a mediocre employment report to provide the necessary cover to raise rates and the November data were more than that," he added. A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly widened in October, as exports fell at a faster rate than imports. The Commerce Department said the trade deficit climbed to $43.9 billion in October from a revised $42.5 billion in September. Economists had expected the trade deficit to narrow to $40.6 billion in October from the $40.8 billion originally reported for the previous month. The economic calendar for next week starts off relatively quiet, although reports on producer prices and retail sales are likely to attract attention 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 sell $24 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.
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