Treasuries Fluctuate Before Closing Modestly Higher

Trading 08 mar 2019 Donner votre avis

After failing to sustain an initial move to the upside, treasuries fluctuated over the course of the trading session on Friday.

Bond prices moved modestly higher in afternoon trading and managed to remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.625 percent.

Treasuries initially benefited from their appeal as a safe haven after a report from the Labor Department revealed job growth nearly ground to a halt in February after soaring in January.

The Labor Department said non-farm payroll employment edged up by 20,000 jobs in February after jumping by an upwardly revised 311,000 jobs in January.

Economists had expected employment to increase by about 180,000 jobs compared to the spike of 304,000 jobs originally reported for the previous month.

The much weaker than expected job growth in February represented the worst month since the loss of 18,000 jobs in September of 2017, when employment was impacted by Hurricanes Harvey and Irma.

However, FTN Financial Chief Economist Chris Low said the stark contrast between the January and February data suggests a "seasonal adjustment breakdown rather than a change in economic performance."

"The three month average, 186k, is respectable, and far more realistic than either the 311k rise in January or the 20k rise in February," Low said.

The report also showed the unemployment rate dropped to 3.8 percent in February from 4.0 percent in January, while the annual rate of wage growth accelerated to 3.4 percent from 3.1 percent.

The jobs data largely overshadowed a separate report from the Commerce Department showing a substantial rebound in housing starts in January.

The report said housing starts soared by 18.6 percent to an annual rate of 1.230 million in January after plunging by 14.0 percent to a revised rate of 1.037 million in December.

Economists had expected housing starts to jump by 11 percent to a rate of 1.197 million from the 1.078 million originally reported for the previous month.

The Commerce Department said building permits also rose by 1.4 percent to an annual rate of 1.345 million in January after inching up by 0.3 percent to 1.326 million in December.

Building permits, an indicator of future housing demand, had been expected to drop by 2.8 percent to a rate of 1.289 million.

Concerns about the global economy contributed to the eventual higher close by treasuries after the European Central Bank downgraded its GDP forecasts and China reported weaker than expected trade data for February.

Next week's trading may be impacted by another batch of economic data, including reports on retail sales, consumer and producer prices, durable goods orders, new home sales, and industrial production.

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.

The Treasury plans to sell $38 billion worth of three-year notes next Monday, $24 billion worth of ten-year notes next Tuesday and $16 billion worth of thirty-year bonds next Wednesday.

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