Treasuries Close Sharply Higher Following Thursday's Sell-Off

(RTTNews) - Treasuries moved sharply higher over the course of the trading day on Friday, recovering from the sell-off that was seen in the previous session.

After spiking higher in early trading, bond prices saw some further upside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 12.1 basis points to 2.602 percent.

The ten-year yield pulled back well off the nearly two-year closing high set on Thursday, nearly offsetting the 13 basis point jump seen in the previous session.

The rebound by treasuries came following the release of a report from the Labor Department showing weaker than expected job growth in the month of July.

The Labor Department said non-farm payroll employment increased by 162,000 jobs in July compared to economist estimates for an increase of about 175,000 jobs.

The disappointing job growth generated some optimism that the Federal Reserve may postpone its plans to begin scaling back its bond purchasing program.

Despite the weaker than expected job growth, however, the unemployment rate dipped to 7.4 percent in July, hitting its lowest level since December of 2008.

Commenting on the impact of the report, Sal Guatieri, Senior Economist at BMO Capital Markets, said, "While we still lean toward the Fed announcing a tapering of asset purchases in September, we will need to see a good bounce in August employment and in the economic data to get there."

"Although the unemployment rate has moved lower, the recent economic softness will raise doubts among policymakers about whether this progress can be sustained," he added.

Meanwhile, traders largely shrugged off separate Commerce Department reports showing a bigger than expected increase in personal spending and a smaller than expected increase in factory orders in June.

Following the slew of potentially market-moving events over the past week, the calendar for next week is relatively quiet.

Nonetheless, traders are likely to keep an eye on reports on service sector activity, international trade, and weekly jobless claims.

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