U.S. unemployment rate falls to 7.8%, lowest since January 2009
By Claudia Assis, MarketWatch
SAN FRANCISCO (MarketWatch) — Long-term Treasury yields rose on Friday after a report showed the U.S. economy added 114,000 jobs last month and the unemployment rate unexpectedly dropped to 7.8%.
The Labor Department said the jobless rate fell below 8% for the first time since President Barack Obama took office. See First Take: The jobs report Obama has been waiting for.
The economy created 114,000 jobs in September, and employment figures for August and July were revised up. See: Jobless rate falls to 7.8%, lowest since 2009.
Yields on 10-year notes 10_YEAR +2.68% , which move inversely to prices, rose 5 basis points to 1.73%, little changed from before the report. A basis point is one one-hundredth of a percentage point.
Yields on 30-year bonds 30_YEAR +2.01% increased 6 basis points to 2.95%, while five-year yields 5_YEAR +4.91% rose 3 basis points to 0.66%.
Economists polled by MarketWatch had predicted the creation of 110,000 jobs last month, while the unemployment rate was forecast to rise to 8.2% from 8.1%.
“Market participants are completely shocked on how favorable the unemployment rate came in today,” said Tom Gigaloma at Navigate Advisors.
Analysts at BTIG said the employment report played into the U.S. Federal Reserve playbook. It was “exactly what the Federal Reserve (was) looking for in terms of a ‘better’ labor market,” said BTIG Chief Global Strategist Dan Greenhaus. Several of the Fed’s recent key moves were predicated on the employment picture, he said.
When “the decline in the unemployment rate appeared to stall in the summer of 2010, the Fed launched [a second round of quantitative easing]. When it appeared to stall in the summer of 2011, the Fed launched Operation Twist and when the decline appeared to stall through the first six months of 2012, the Fed launched QE3,” Greenhaus said.
“Going forward though, the unemployment report takes on even more significance than it usually does and members of the FOMC have to look at today’s report in a favorable light,” he added.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
