Treasuries Regain Ground Following Yesterday's Sell-Off

(RTTNews) - After moving sharply lower in the previous session, treasuries regained some ground during the trading day on Friday.

Bond prices fluctuated in morning trading but remained firmly positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 7.2 basis points to 3.193 percent.

The ten-year yield gave back ground after ending the previous session reach its highest closing level in well over two months.

The rebound by treasuries came following the release of a closely watched Labor Department report showing U.S. employment increased roughly in line with economist estimates in the month of August.

The report showed non-farm payroll employment rose by 315,000 jobs in August after surging by a revised 526,000 jobs in July.

Economists had expected employment to increase by about 300,000 jobs compared to the jump of 528,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate edged up to 3.7 percent in August from 3.5 percent in July. Economists had expected the unemployment rate to remain unchanged.

The unexpected uptick by the unemployment rate came as the labor force increased by 786,000 persons, more than outpacing the 442,000-person growth in the household measure of employment.

Amid recent concerns about the outlook for interest rates, the jobs data was described as a "goldilocks" report by some economists, coming in neither too hot nor too cold.

"The August employment report paints a very positive picture regarding the current state of the US economy with solid jobs growth yet signs that supply strains are easing as workers return to the labor force," said ING Chief International Economist James Knightley

He added, "With wage growth coming in lower than expected it points to a slower pace of rate hikes after September's expected 75 basis point move."

As separate report released by the Commerce Department unexpectedly showed a sharp pullback in new orders for U.S. manufactured goods in the month of July.

The Commerce Department said factory orders slumped by 1.0 percent in July after surging by a revised 1.8 percent in June.

Following a long holiday weekend, next week's trading may be impacted by reaction to reports on service sector activity and the U.S. trade deficit along with remarks by several Fed officials, including Chair Jerome Powell.