U.S. Government Bonds Decline After Surge in Job Growth -- Update
December 06 2019 - 5:03PM
Dow Jones News
By Daniel Kruger
U.S. government bond prices fell Friday after data showing the
economy added far more jobs than expected.
The yield on the benchmark 10-year Treasury note rose for a
third consecutive trading session, settling at 1.842% from 1.791%
before the report and from 1.795% Thursday, according to
Tradeweb.
Yields, which climb when bond prices decline, rose after the
Labor Department said employers added 266,000 workers to their
payrolls last month and unemployment matched a 50-year low of 3.5%.
The gains topped the 187,000 increase predicted by economists
surveyed by The Wall Street Journal, exceeding forecasts by the
most since January.
The report offers reassurance to investors, who spent much of
the year concerned about a global economic slowdown and uncertain
progress toward resolving trade tensions between the U.S. and
China. Its strength was particularly surprising after other
indicators earlier in the week, such as tepid data on the services
sector presented a less positive assessment of the economy.
"It goes against other indicators that have said the economy was
slowing, " said Gary Pollack, head of fixed-income trading at
Deutsche Bank Private Wealth Management. While the data was good,
it was unlikely to alter an environment that has supported low bond
yields.
While the job growth exceeded expectations, the data still
signaled muted inflation. Average hourly earnings have risen 3.1%
from a year ago, though they increased just 0.2% in November.
Low borrowing costs and expectations for the Fed to hold
interest rates steady suggest corporate bonds and other "risk
assets in these circumstances should perform better," Mr. Pollack
said.
The WSJ Dollar Index, which measures the U.S. currency against a
basket of 16 others, rose 0.1% to a recent 90.63.
Write to Daniel Kruger at Daniel.Kruger@wsj.com
(END) Dow Jones Newswires
December 06, 2019 16:48 ET (21:48 GMT)
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