Treasuries Extend Downward Trend On Upbeat Jobs Data

Extending the downward trend seen over the past several sessions, treasuries showed a moderate move to the downside on Friday.

Bond prices moved lower early in the session and remained in negative territory throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.3 basis points to 2.393 percent.

With the continued increase on the day, the ten-year yield climbed to its highest closing level in almost two months.

The continued decline by treasuries came following the release of a report from the Labor Department showing much stronger than expected job growth in the month of June.

The report said non-farm payroll employment jumped by 222,000 jobs in June following an upwardly revised increase of 152,000 jobs in May.

Economists had expected employment to climb by 179,000 jobs compared to the addition of 138,000 jobs originally reported for the previous month.

Despite the stronger than expected job growth, the unemployment rate inched up to 4.4 percent in June from 4.3 percent in May. Economists had expected the unemployment rate to hold steady.

The Labor Department also said average hourly employee earnings rose by 0.2 percent to $26.25. Average hourly earnings in June were up by 2.5 percent year-over-year.

“This was a strong jobs report, with a better-than-expected payroll rise augmented by a solid upward revision,” said Chris Low, chief economist at FTN Financial.

He added, “Still, it should not add to the already considerable fire under the FOMC because wage pressures are nowhere to be seen, and labor slack relaxed unexpectedly.”

The Federal Reserve is scheduled to make its next decision on interest rates following a two-day meeting later this month.

Fed Chair Janet Yellen’s semiannual testimony before Congress is likely to attract attention next week along with comments by several other Fed officials.

Trading may also be impacted by reports on retail sales, industrial production and producer and consumer prices as well as the Fed’s Beige Book.

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 auction $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.

The material has been provided by InstaForex Company – www.instaforex.com

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