MW: Treasurys fall as job losses exceed expectations
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices declined Friday after the Labor Department's monthly job report was worse than forecast, while investors turned their focus to massive upcoming bond issuances.
Yields on 10-year notes , which move in the opposite direction of prices, rose 9 basis points to 3.78%.
Two-year note yields rose 6 basis points to 1.34%. A basis point is 0.01%.
The government will sell the first part of $55 billion in debt sales Monday, which often prompts traders to sell existing securities in order to purchase newer ones.
"Treasurys are looking beyond the numbers and towards the larger refunding next week," said Christopher Sullivan, chief investment officer at United Nations Federal Credit Union.
The economy lost 240,000 jobs last month, more than the 210,000 median estimate of economists surveyed by MarketWatch. September and August losses were also revised higher. See Economic Report.
The unemployment rate rose to 6.5%, the highest in 14 years. Economists expected it to rise to 6.3% from 6.1%.
"The bond market has rallied quite a bit and the numbers were not really a surprise," said Gary Pollack, head of fixed-income trading at Deutsche Bank's private-wealth management unit. "We knew the economy was weak."
After reaching the lowest since March earlier this week, two-year note yields have dropped about 26 basis points since last Friday, the biggest decline in five weeks.
Ten-year yields have fallen from 3.98% on Oct. 31.
The Treasury will sell $25 billion of three-year notes on Monday. That will be followed by a record $20 billion of 10-year notes and $10 billion of 30-year bonds after the bond market closes Tuesday to observe Veterans Day, leaving less time to prepare for the auctions.
"Traders appear to be using today as the day to make room for what is coming," said Kevin Giddis, managing director of fixed income for Morgan Keegan & Co.
President-elect Barack Obama was also scheduled later Friday give his first press conference since being elected. See full story.
The worse the jobs numbers get, the more ammunition Congress will have to approve an economic stimulus package, which is likely to lead to even more debt sales and higher bond yields, said Andrew Brenner, co-head of structured products and emerging markets at MF Global.
