Treasuries Move To The Upside Following Mixed Jobs Data

(RTTNews) - Treasuries moved higher over the course of the trading day on Friday following the release of the closely watched monthly jobs report.

After seeing some initial volatility, bond prices moved steadily higher as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.128 percent.

Treasuries may have benefited from their role as a safe haven, as the Labor Department's monthly jobs report offered mixed data, adding to recent uncertainty about the outlook for interest rates.

The report showed much weaker than expected job growth in August but also a drop in the unemployment rate and an increase in wages.

The Labor Department said non-farm payroll employment climbed by 173,000 jobs in August, well below the increase of 220,000 jobs anticipated by economists.

However, the report also showed upward revisions to the job growth seen in both June and July, with the revised data showing increases of 245,000 jobs in each month.

With the upward revisions, employment gains in June and July combined were 44,000 more than previously reported.

The report also said the unemployment rate edged down to 5.1 percent in August from 5.3 percent in July, hitting its lowest level since April of 2008.

Additionally, the Labor Department said average hourly employee earnings climbed 0.3 percent to $25.09 in August, reflecting a 2.2 percent year-over-year increase.

"August's employment report is fairly mixed and can be used to make a case for or against a rate hike at the upcoming FOMC meeting," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "As far as we're concerned, the September meeting is a 50-50 toss-up."

The mixed data is likely to increase the focus on the other economic reports due to be released in the weeks leading up to the Federal Reserve's next monetary policy announcement on September 17th.

The economic calendar for next week is relatively light, although traders are likely to keep a close eye on reports on weekly jobless claims, producer prices, and consumer sentiment.

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