MW: Treasurys on the rise after latest data on job losses
Bond traders await outcome of House vote on financial-rescue package
NEW YORK (MarketWatch) -- Treasury prices gained Friday, riding higher after the government said more jobs were cut last month than in any month since March 2003, confirmation of weakness in the economy that many anticipated in light of the recent roller-coaster ride in financial markets.
Two-year note yields ) slipped four basis points, or 0.04%, to 1.66%. Yields move in the opposite direction as prices.
The U.S. economy lost 159,000 jobs in September, marking the ninth straight month of declines. Economists surveyed by MarketWatch had forecast a drop of 110,000 in nonfarm payrolls.
Last month's unemployment rate remained at 6.1%, the Labor Department reported. See Economic Report.
The payrolls number was expected by many to be dismal, so many were not surprised. That may have triggered some selling due to relief it wasn't even worse.
"When you look at what happened throughout September, you couldn't have expected much hiring to occur, and the evidence was fairly overwhelming this report would be weak," said John Miller, chief investment officer for Nuveen Asset Management, which oversees more than $60 billion in fixed-income assets.
Rescue vote due
Treasurys have rallied this week as anxious investors sought a safe haven amid doubts whether Congress would approve legislation to help rescue financial companies by enabling them to offload bad assets.
Yields on 10-year Treasurys stood at 3.64%, down from 3.82% a week ago.
The House of Representatives is expected to vote later Friday on a measure the Senate approved this week, possibly reducing the need for the safety of U.S. debt.
"If the bailout plan gains momentum and gets passed, that's probably a more important factor for short-term Treasury prices because it could help to relieve the pressures," Miller said.
Meanwhile, the Federal Reserve is now fully expected to lower interest rates by the end of the month to spur economic growth, according to trading in the November federal funds futures contract.
"I expect that maybe the Fed eases one more time, but the market has pretty much priced in another ease," said William Bellamy, who manages about $1 billion as director of fixed income at Thompson Siegel & Walmsley.