Treasuries Finish Choppy Trading Day Roughly Flat


Following the sell-off seen over the three previous sessions, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices spent the day bouncing back and forth across the unchanged line before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 4.050 percent.

With the slight uptick on the day, the ten-year yield once again ended the session at its highest closing level in four months.

The choppy trading by treasuries came after the Labor Department released its closely watched monthly jobs report, showing U.S. employment increased by less than expected in the month of June.

The Labor Department said non-farm payroll employment jumped by 209,000 jobs in June, while economists had expected employment to shoot up by 225,000 jobs.

The report also showed the surges in employment in April and May were downwardly revised to 217,000 jobs and 306,000 jobs, respectively, reflecting a combined downward revision of 110,000.

Meanwhile, the Labor Department said the unemployment rate edged down to 3.6 percent in June from 3.7 percent in May, in line with economist estimates.

The report also showed annual wage growth remained elevated, coming in at 4.4 percent in June, unchanged from an upwardly revised reading in May.

Economists had expected the pace of growth to slow to 4.2 percent from the 4.3 percent originally reported for the previous month.

Following ADP’s report showing a much bigger than expected surge in private sector employment in June, the Labor Department report has led to some uncertainty about the outlook for interest rates.

While the Federal Reserve is still widely expected to raise rates by another quarter point later this month, the outlook for further rate hikes is likely to be impacted by next week’s inflation data.

“A softer jobs report than widely expected has taken some of the steam out of recent market moves, but the labor market remains too tight for the Fed to relax,” said ING Chief International Economist James Knightley.

He added, “A July rate hike is coming, but labor data is the most lagging of indicators and softer inflation next week could see rate hike expectations for further out moderate a touch.”

With the jobs report now in the rearview mirror, the inflation data is likely to move into the spotlight next week.

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