Treasuries Close Notably Higher Following Jobs Report

(RTTNews) - After moving sharply lower over the course of the two previous sessions, treasuries regained some ground during trading on Friday.

Bond prices moved to the upside in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.1 basis points to 2.390 percent.

With the drop on the day, the ten-year yield pulled back after ending Thursday's trading at its highest closing level in well over a year.

The higher close by treasuries came following the release of the Labor Department's closely watched monthly employment report for November.

The report said non-farm payroll employment climbed by 178,000 jobs in November following a downwardly revised increase of 142,000 jobs in October.

Economists had expected employment to increase by about 170,000 jobs compared to the addition of 161,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate fell to 4.6 percent in November from 4.9 percent in October. The unemployment rate had been expected to remain unchanged.

With the unexpected decrease, the unemployment rate fell to its lowest level since hitting a matching rate in August of 2007.

The unexpected drop by the unemployment rate partly reflected a decrease in labor force participation, with the participation rate edging down to 62.7 in November from 62.8 in October.

The report also said average hourly employee earnings fell by $0.03 to $25.89 in November. The annual rate of wage growth subsequently slowed to 2.5 percent from 2.8 percent.

Nonetheless, the stronger than expected job growth shown by the report is likely reinforce expectations that the Federal Reserve will rates interest rates at its next meeting later this month.

"That weak wage figure will probably raise a few eyebrows among some of the more dovish Fed voters," said James Smith, Developed Markets Economist at ING. "But it would have had to have been a really disastrous jobs report to have derailed the FOMC's plans to hike in December."

He added, "In fact, assuming that the latest wage growth figure was a blip, we still think that the labor market is strong enough to support two hikes from the FOMC next year."

Next week's trading may be impacted by reaction to reports on service sector activity, international trade, labor productivity, and consumer sentiment.