Treasurys tumble after upbeat jobs report

AP News
Posted: Dec 04, 2009 5:24 PM

Treasury prices tumbled Friday after the Labor Department said employers cut far fewer jobs than anticipated in November.

The better-than-expected jobs report provided the latest sign yet that the economy is recovering. That in turn would give the Federal Reserve room to raise interest rates from their historic lows, which would hurt the value of bonds.

The price of the 10-year Treasury note, which is often used as a benchmark for consumer loans, fell 24/32 to 99 4/32 in late trading. That sent its yield up sharply to 3.48 percent, compared with 3.38 percent late Wednesday.

The Labor Department reported that employers shed just 11,000 jobs last month. That was the smallest monthly loss since December 2007, when the recession began, and much stronger than the 130,000 job losses predicted by economists polled by Thomson Reuters.

In another good sign for the job market, the unemployment rate fell to 10 percent from a 26-year high of 10.2 percent in October. Economists forecast the rate would remain unchanged.

Long-term Treasurys took the hardest hit Friday because they would have the most exposure to an interest-rate increase in the coming quarters. The price of the 30-year bond fell 1 to 99 20/32, and its yield rose to 4.40 percent from 4.34 percent.

In other trading, the price of the three-year note fell 11/32 to 100 5/32, sending its yield up to 1.32 percent from 1.20 percent.

The yield on the three-month T-bill was flat at 0.04 percent. Its discount rate was 0.05 percent.

The cost of borrowing between banks increased fractionally. The British Bankers' Association said the rate on three-month loans in dollars _ the London Interbank Offered Rate, or Libor _ rose to 0.2566 percent from 0.2553 percent.