Treasuries Close Modestly Higher After Seeing Initial Weakness
(RTTNews) - After recovering from an initial move to the downside, stocks saw modest strength throughout much of the trading session on Friday.
Bond prices spent most of the day hovering just above the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.501 percent.
Treasuries initially came under pressure in reaction to a report from the Labor Department showing a significant reacceleration in the pace of U.S. job growth in the month of March.
The Labor Department said non-farm payroll employment jumped by 196,000 jobs in March after edging up by a revised 33,000 jobs in February.
Economists had expected employment to increase by about 180,000 jobs compared to the uptick of 20,000 jobs originally reported for the previous month.
However, Paul Ashworth, Chief U.S. Economist at Capital Economics, noted the pace of growth is still on a downward trend, with the three-month average monthly gain dropping to a 15-month low of 180,000.
"Overall, nothing here to shift the dial very far in either direction," Ashworth said of the closely watched monthly jobs report. "But the gradual slowdown in trend employment growth is another sign that the economy is weakening."
Bond prices subsequently recovered from the initial drop, although traders seemed reluctant to make significant moves amid lingering uncertainty about the U.S.-China trade talks.
Chinese Vice Premier Liu He said the two sides have conducted fruitful consultations in the past two days, especially on important issues such as the text of economic and trade agreements.
Reports on factory orders, consumer and producer prices, and import and export prices are likely to attract attention next week along with the release of the minutes of the latest Federal Reserve meeting.
Bond traders are also likely to keep an eye on the results of the Treasury Department's auction of three-year and ten-year notes and thirty-year bonds.
The Treasury plans to sell $38 billion worth of three-year notes next Tuesday, $24 billion worth of ten-year notes next Wednesday and $16 billion worth of thirty-year bonds next Thursday.