Treasuries Come Under Pressure After Monthly Jobs Report

(RTTNews) - After ending the previous session modestly higher, treasuries showed a notable move back to the downside during trading on Friday.

Bond prices came under pressure over the course of morning trading and remained stuck in the red throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.3 basis points to 1.883 percent.

The weakness among treasuries came following the release of a report from the Labor Department showing stronger than expected job growth in the month of February.

The report said total non-farm employment jumped by 242,000 jobs in February compared to economist estimates for an increase of about 190,000 jobs.

Job growth in December and January was also upwardly revised to 271,000 and 172,000, respectively, reflecting a net upward revision of 30,000 jobs.

Meanwhile, the Labor Department also said average hourly employee earnings dipped 3 cents or 0.1 percent to $25.35. Earnings were up by 2.2 percent year-over-year.

Analysts have recently been focused on wages amid ongoing uncertainty about the outlook for the Federal Reserve's monetary policy.

"Overall, it's clear that labor market conditions are still strong," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "The lack of a more marked pick-up in wage growth is the only missing element."

"But as far as the Fed is concerned, it is already seeing a clear acceleration in core price inflation, so it can't delay raising interest rates for much longer," he added. "A June rate hike is coming."

The jobs report largely overshadowed a separate report from the Commerce Department showing that the U.S. trade deficit widened in January.

Next week's trading activity may be somewhat subdued amid a lack of major U.S. economic data, with traders looking ahead to the following week's Federal Reserve meeting.

Bond traders are still 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, $20 billion worth of ten-year notes next Wednesday, and $12 billion worth of thirty-year bonds next Thursday.