Weaker Than Expected Jobs Data Leads To Extended Rally By Treasuries

(RTTNews) - Treasuries moved sharply higher during trading on Friday, extending the strong upward move seen over the two previous sessions.

Bond prices gave back ground after an early rally but remained firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 11.1 basis points to 4.558 percent.

The ten-year yield extended the steep drop seen on Wednesday and Thursday, ending the session at its lowest closing level in over a month.

Treasuries continued to benefit from optimism the Federal Reserve is done raising interest rates after the Labor Department released a report showing U.S. employment rose by less than expected in the month of October.

The closely watched report said employment climbed by 150,000 jobs in October after jumping by a downwardly revised 297,000 jobs in September.

Economists had expected employment to increase by 180,000 jobs compared to the surge of 336,000 jobs originally reported for the previous month.

The Labor Department also said the unemployment rate crept up to 3.9 percent in October from 3.8 percent in September. The unemployment rate was expected to remain unchanged.

"Given that jobs growth is slowing and the unemployment rate is ticking up slightly, that is the kind of data that will keep the Fed on hold and both stock and bond prices should move higher (bond yields lower) in the absence of a more aggressive Fed," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

A separate report released by the Institute for Supply Management showed a bigger than expected slowdown in the pace of growth in U.S. service sector activity in the month of October.

The ISM said its services PMI fell to 51.8 in October from 53.6 in September, although a reading above 50 still indicates growth. Economists had expected the index to edge down to 53.0.

The economic calendar is relatively quiet next week, although traders are likely to keep an eye on reports on initial jobless claims, the U.S. trade deficit and consumer sentiment along with remarks by Fed Chair Jerome Powell.