European debt, concerns about Fed keep a lid on yields
NEW YORK (MarketWatch) — Treasury prices turned back up in volatile action Friday after the U.S. said the economy netted more jobs than analysts expected in December, adding to optimism that domestic growth may continue to reduce the appeal of U.S. debt.
What’s been very slow improvement in economic data, especially that related to the labor market, may not be enough to keep the Federal Reserve from further easing monetary policy, analysts said.
“The economy is badly lagging a ‘proper’ rate of job growth sufficient to restore the prior level of employment,†said Dan Greenhaus, chief global strategist at BTIG. “Even at 200,000 jobs or so, this is going to take years.â€
Thirty-year bond yields 30_YEAR -0.36% , which move inversely to prices, turned down 1 basis point to 3.05%, a reversal after rising to 3.11%. A basis point is one one-hundredth of a percentage point.
Yields on 10-year notes 10_YEAR -0.95% rose as high as 2.03% just after the data, then turned down 2 basis points to 1.98%.
Yields on 2-year notes 2_YEAR +0.38% slipped 1 basis point to 0.26%.
The Labor Department said 200,000 jobs were added in December. The unemployment rate unexpectedly fell to 8.5% from an upwardly revised 8.7% in November, in part due to a smaller labor force, according to analysts at CRT Capital Group. See story on payrolls report,
“While not as strong as the headline might suggest, and ongoing shrinkage in labor force helping unemployment statistics, it’s still OK enough with a gain in wages and the workweek,†said CRT’s David Ader and Ian Lyngen. “It’s really a muddling report, but muddling seems good enough and is, at least, consistent with positive momentum to start this year.â€
Treasurys have remained in a tight range recently, keeping 10-year yields near 2%, as investors try to balance optimism about U.S. economic data and worries about festering debt and banking problems in Europe. Read more about Treasury bonds.
