Treasuries Climb Off Early Lows But Remain Firmly Negative

(RTTNews) - After moving sharply lower early in the session, treasuries regained some ground over the course of the trading day on Friday but remained firmly in the red.

Bond prices spent most of the afternoon moving roughly sideways after recovering from their early lows. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.9 basis points to 4.378 percent.

The ten-year yield more than offset the pullback seen over the two previous sessions, ending the day at its highest closing level in over four months.

The early sell-off by treasuries came following the release of a closely watched Labor Department report showing much stronger than expected job growth in the month of March.

The Labor Department said non-farm payroll employment spiked by 303,000 jobs in March after surging by a downwardly revised 270,000 jobs in February.

Economists had expected employment to jump by 200,000 jobs compared to the addition of 275,000 jobs originally reported for the previous month.

The report also said the unemployment rate edged down to 3.8 percent in March from 3.9 percent in February, while economists had expected the unemployment rate to come in unchanged.

While the report initially added to concerns about the outlook for interest rates, selling pressure waned somewhat as traders digested the details of the report, including a continued slowdown in the annual rate of wage growth.

The Labor Department said the annual rate of wage growth slowed to 4.1 percent in March from 4.3 percent in February, in line with estimates.

"While wages are growing solidly, their growth rate has moderated to the least since mid-2021," said Bill Adams, Chief Economist for Comerica Bank. "The economy-wide slowdown in inflationary pressures is extending to labor costs."

"The Fed will be glad to see wage growth normalizing," he added. "This jobs report will make the Fed more confident that inflation is moderating; they say more confidence on this point is a precondition for making rate cuts this year."

Inflation data will move back into the spotlight next week, with the Labor Department due to release its reports on consumer and producer price inflation in the month of March.