Weak employment report lifts Treasury prices

AP News
Posted: Jul 08, 2011 5:32 PM
Weak employment report lifts Treasury prices

Government bond prices jumped Friday after the government said hiring stalled last month.

The Labor Department reported that the economy added just 18,000 jobs in June, the lowest figure in nine months. The unemployment rate inched up to 9.2 percent.

The news sent investors into the relative safety of Treasurys. The 10-year note gained $1.00 for every $100 invested. The higher price lowered the yield to 3.02 percent, down from 3.13 percent late Thursday. When bond prices rise, yields fall.

The jobs report caught many by surprise. Economists had forecast a gain of 90,000 jobs and expected the unemployment rate to remain at 9.1 percent. Recent news raised hopes that the Labor Department's report would trump those estimates. Payroll processor ADP said Thursday that companies added 157,000 employees in June. Before Friday's report, traders dropped Treasurys on speculation that the unemployment rate might fall.

But by the end of the trading day Treasury prices were broadly higher. The 30-year bond rose $1.37 for every $100 invested. And its yield fell to 4.29 percent from 4.37 percent Thursday. The two-year yield sank to 0.39 percent from 0.47 percent.

In the market for short-term bills, the three-month Treasury bill paid a yield of 0.02 percent. The discount was 0.03 percent.