Treasuries Move Higher In Reaction To Monthly Jobs Report

(RTTNews) - Long-term treasuries moved higher over the course of the trading day on Friday as traders reacted to the highly anticipated monthly jobs report.

Bond prices initially saw volatility following the release of the data before turning firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 5.9 basis points to 2.175 percent.

The five-year and thirty-year yields also moved lower, while short-term yields edged higher as the jobs data was widely seen as strong enough to support an increase in interest rates in September.

The Labor Department said non-farm payroll employment rose by 215,000 jobs in July following an upwardly revised increase of 231,000 jobs in June.

Economists had expected employment to climb by about 223,000 jobs, which would have matched the increase originally reported for the previous month.

While the job growth came in below the consensus estimate, Paul Ashworth, Chief U.S. Economist at Capital Economics, said the increase is easily enough to keep the Federal Reserve on course for a September interest rate hike.

The report also said the unemployment rate held at 5.3 percent in July, unchanged from the seven-year low set in June. The unchanged reading matched economist estimates.

The annual rate of average hourly earnings growth ticked up to 2.1 percent in July from 2.0 percent in June, but Ashworth said "there is still absolutely no sign whatsoever of any meaningful acceleration in that growth rate."

"Nevertheless, Fed Chair Janet Yellen has stressed that an acceleration in wage growth is not a necessary pre-condition for raising interest rates, so it won't prevent a September rate hike," Ashworth said.

The economic calendar for next week starts off quiet but picks up later in the week with the release of reports on retail sales, producer prices, and industrial production.

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, $24 billion worth of ten-year notes next Wednesday, and $16 billion worth of thirty-year bonds next Thursday.