Treasury Yields End Session Higher After Jobs Report -- Update
By Sam Goldfarb
U.S. government bond prices slipped Friday after new data showed
the economy added more jobs last month than expected.
The yield on the benchmark 10-year U.S. Treasury note settled at
0.562%, according to Tradeweb, compared with 0.535% on
Yields, which rise when bond prices fall, immediately ticked
higher after the Labor Department said the economy added 1.8
million jobs in July on top of the 4.8 million added the previous
month. That was above the forecast of economists surveyed by The
Wall Street Journal, who had expected a 1.5 million increase in
Yields soon fell back to previous levels, a sign investors
expect a challenging economic recovery and years of ultraloose
monetary policy while businesses and households try to recover from
the fallout of the coronavirus pandemic. Still, yields edged higher
again later in the morning, as investors looked ahead to a slate of
large Treasury note auctions coming next week.
Before the report, yields on longer-term Treasurys had been
trending downward owing in part to signals from the Federal Reserve
that it could leave short-term interest rates at around zero until
inflation has reached or exceeded its 2% target.
Investors' expectations for years of easy money policies have
helped drag the 10-year yield near its record closing low of 0.501%
after it spent months mostly hovering around two-thirds of a
percent. At the same time, signals from the Fed have led to an even
sharper decline in the yields on Treasury-inflation protected
securities, or TIPS, as investors bet the central bank will at
least drive inflation closer to its target.
The yield on the 10-year TIPS dropped to a record low in late
July and has extended its decline since then, finishing Friday's
session at around negative 1.04%.
A measure of investors' annual inflation expectations based on
the difference between 10-year nominal and inflation-protected
Treasury yields -- known as the break-even inflation rate --
climbed to above 1.6% from 1.05% on May 1.
Write to Sam Goldfarb at email@example.com
(END) Dow Jones Newswires
August 07, 2020 17:00 ET (21:00 GMT)
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