By Dow Jones Business News, October 22, 2013, 09:55:00 AM EDT
By Carolyn Cui
Treasurys rallied sharply higher Tuesday, sending yields lower, after a weak reading of payrolls for September further
eased market fears that the Federal Reserve would begin tapering off its stimulus program anytime soon.
In early morning trade, benchmark 10-year Treasury notes jumped 18/32 in price to yield 2.541%. The 30-year Treasury
bonds added 30/32 in price to yield 3.630%. Bond prices move inversely to their yields.
The Labor Department said U.S. employers added only 148,000 jobs last month, which was below market expectations. The
country's unemployment rate ticked down from 7.3% in August to 7.2%, the lowest level since November 2008.
Economists surveyed by Dow Jones Newswires had expected that total nonfarm payrolls would rise by 180,000 and the
unemployment rate would stay at 7.3% in September.
The September payroll growth continued the recent trend of declining employment growth in the U.S. Over the past 12
months, the average nonfarm payroll growth has been around 185,000, but average increase over the past three months fell
"It's not a picture of a strengthening labor market on trend," said Jake Lowery, a portfolio manager with ING U.S.
Investment Management. Bond investors are also skeptical of the upcoming October payrolls print given the data
collection issues due to the government shutdown.
"There's nothing on the horizon to convince investors that the Fed tapering is imminent," he said.
Revisions were mixed. The government revised the August number up to 193,000 from an earlier estimate of 169,000. But
July's increase was revised down to 89,000 from 104,000.
The September jobs report is likely to reinforce investors' expectations that the Fed would keep its hand in the bond
market for several more months. With much of the key economic data being delayed, many investors have already shifted
back their expectations for tapering to early next year, partly due to the lack of data.
In a survey conducted on Monday by CRT Capital LLC, only 10% of the respondents expected the Fed to start winding down
its $85-billion-a-month bond-buying program at its December meeting, while 63% were looking at a start date in March or
Fed policy makers are scheduled to hold their October meeting next week.
The September jobs report was the first key official economic report that investors have received from the government
after flying blind for more than two weeks during the shutdown. During the hiatus, a slew of economic anecdotes from
private-data providers on employment, manufacturing activity and the housing market hinted that the U.S. economy has
recently re-entered a soft patch.
Write to Carolyn Cui at firstname.lastname@example.org
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