Treasuries Pull Back Off Best Levels But Close Firmly Positive

(RTTNews) - After closing roughly flat for two consecutive sessions, treasuries saw notable strength during the trading day on Friday.

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, fell by 4 basis points to 2.084 percent.

Treasuries moved sharply higher early in the session as traders reacted to a closely watched report from the Labor Department showing a substantial slowdown in the pace of U.S. job growth in the month of May.

The report said non-farm payroll employment rose by 75,000 jobs in May after soaring by a downwardly revised 224,000 jobs in April.

Economists had expected employment to increase by about 185,000 jobs compared to the jump of 263,000 jobs originally reported for the previous month.

Meanwhile, the unemployment rate came in at 3.6 percent in May, unchanged from the previous month and in line with economist estimates.

"The soft 75,000 gain in non-farm payrolls in May wasn't quite as bad as the dismal ADP employment reading earlier this week but, along with the downward revisions to previous months, it is another sign that economic growth is slowing," said Andrew Hunter, Senior U.S. Economist at Capital Economics.

He added, "On balance, we still think Fed officials will want to see evidence of more sustained weakness before taking action, but we are increasingly convinced that the Fed will begin cutting interest rates later this year."

Buying interest waned over the course of the morning, however, inspiring some traders to cash in on the early move to the upside.

Next week's trading is likely to be impacted early on by whether President Donald Trump follows through on his threat to impose a 5 percent tariff on all Mexican imports.

Reports on producer and consumer prices, import and export prices, retail sales, and industrial production may also attract attention as the week progresses.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.