Treasuries See Further Downside After Stronger Than Expected Jobs Data

(RTTNews) - Treasuries showed a notable move to the downside during trading on Friday, extending the pullback seen over the two previous sessions.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.3 basis points to 3.101 percent.

The continued weakness among treasuries came following the release of a closely watched Labor Department showing stronger than expected U.S. job growth in the month of June.

The data eased worries about the economy while also adding to concerns about aggressive interest rate hikes by the Federal Reserve.

The Labor Department said non-farm payroll employment jumped by 372,000 jobs in June after surging by a revised 384,000 jobs in May.

Economists had expected employment to increase by 268,000 jobs compared to the addition of 390,000 jobs originally reported for the previous month.

"The strong 372,000 gain in non-farm payrolls in June appears to make a mockery of claims the economy is heading into, let alone already in, a recession," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "That may be enough to solidify the case for another 75bp rate hike at the Fed's meeting later this month, although signs that wage growth is cooling and the recent plunge in commodity prices both suggest the inflation outlook could improve more quickly than officials had feared."

The stronger than expected job growth reflected notable job gains in professional and business services, leisure and hospitality, and healthcare.

Meanwhile, the report showed the unemployment remained at 3.6 percent for the fourth month in a row, matching economist estimates.

Next week's trading is likely to be impacted by reaction to reports on consumer and producer price inflation, which could impact the outlook for interest rates.

Reports on retail sales, industrial production and consumer sentiment are also likely to attract attention later in the week.

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.