Treasuries Finish Choppy Trading Session Moderately Higher

(RTTNews) - Treasuries showed a lack of direction throughout much of the trading session on Friday before ending the day moderately higher.

After bouncing back and forth across the unchanged line, bond prices moved to the upside going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.1 basis points to 1.366 percent.

The choppy trading seen for most of the day 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 surged up by 287,000 jobs in June versus economist estimates for an increase of about 180,000 jobs.

However, the Labor Department also said the uptick in jobs in May was downwardly revised to just 11,000 from the 38,000 originally reported.

The weak job growth in May was partly due to a since-resolved strike by Verizon (VZ) workers, which contributed to the loss of 39,000 jobs in the information sector.

While the report also said the unemployment rate rose to 4.9 percent in June from 4.7 percent in May, the increase primarily reflected a rebound in the number of people in the labor force.

On the wage front, the Labor Department said average hourly employee earnings rose by $0.02 to $25.61 in June after rising by $0.06 in May.

Compared to the same month a year ago, average hourly earnings have risen by 2.6 percent, reflecting the strongest wage growth this year.

Andrew Hunter, Assistant Economist at Capital Economics, said the strong job growth in June suggests the sharp slowdown in the preceding months was nothing more than a blip.

"Fed officials will want to see evidence of a more sustained recovery in employment growth over July and August as well, but this nonetheless supports our view that the next hike could still be in September," Hunter said.

The Federal Reserve is scheduled to hold its next policy meeting later this month, but most analysts expect the central bank to remain on hold following Britain's recent vote to leave the European Union.

The economic calendar for next week starts off relatively quiet but picks up as the week progresses and culminates with a slew of data next Friday.

Traders are likely to keep an eye on reports on retail sales, industrial production and producer and consumer price inflation.

Bond trading may also be impacted by reaction to the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury plans to auction $24 billion worth of three-year notes next Monday, $20 billion worth of ten-year notes next Tuesday and $12 billion worth of thirty-year bonds next Wednesday.