Treasuries Close Modestly Higher Following Recent Weakness

(RTTNews) - Treasuries moved modestly higher during trading on Friday, regaining some ground after closing lower for three straight days.

Bond prices moved steadily higher in morning trading before giving back some ground in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 2.675 percent.

The modest strength among treasuries came on the heels of the release of the Labor Department's closely watched monthly employment report.

The report said non-farm payroll employment increased by 113,000 jobs in January following a slightly upwardly revised increase of 75,000 jobs in December. Economists had been expecting employment to climb by about 180,000 jobs.

Despite the weaker than expected job growth, the unemployment rate still edged down to 6.6 percent in January from 6.7 percent in December. The unemployment rate had been expected to come in unchanged.

With the unexpected decrease, the unemployment rate fell to its lowest level since hitting 6.5 percent in October of 2008.

The continued decrease by the unemployment rate came as employment measured by the household survey rose by 638,000 and the labor force increased by 523,000.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "So, payroll growth appears to have slowed but, given the strength of economic growth in the second half of last year, we expect to see a rebound in the monthly gains over the next few months."

"Moreover, with the unemployment rate down to only 6.6%, the Fed should continue to wind down its asset purchases," he added.

The economic calendar for next week is relatively light, although traders are still likely to keep an eye on reports on retail sales, industrial production, and consumer sentiment.

Trading could also be impacted by remarks by Fed Chair Janet Yellen, who is due to testify to before Congress in what will be her first public comments since taking over as head of the central bank.

The results of the Treasury Department's auctions of three-year and ten-year and thirty-year bonds may also attract some attention.