Treasurys Rise Ahead of Jobs Report
Treasury prices advanced Thursday, bolstered by a bond-friendly drop in factory orders as investors adjusted their holdings ahead of the government's jobs creation report for September. Treasurys, which often benefit from signs of economic weakness, rose after the Commerce Department said factory orders fell 3.3 percent in August, exceeding economists' expectations for a 2.8 percent slide. Investors hoped the data would nudge the Federal Reserve toward another interest rate cut.
Jobs creation data, which is always influential, has assumed even greater importance this month as many believe the report will be decisive in determining whether the economy is moving into a recession and whether the Fed will cut rates this month. The Fed, which weighs jobs growth data heavily in setting rates, will hold its monetary policy meeting on Oct. 30-31.
The benchmark 10-year Treasury note rose 8/32 to 101 24/32 with a yield of 4.53 percent, down from 4.54 percent at Wednesday's close. Prices and yields move in opposite directions.
The 30-year long bond gained 16/32 to 103 21/32 with a 4.77 percent yield, down from 4.79 percent late Wednesday.
The 2-year note gained 1/32 to 100 with a yield of 3.99 percent, down from 4.00 percent at its Wednesday close.
The yield on the 3-month Treasury bill dipped to 3.94 percent from 3.95 percent Wednesday and the discount rate fell to 3.84 percent from 3.85 percent.
The market's preoccupation with the September employment report is fueled by the fact that recent data reports have painted a complex picture that allows both for a case that the economy is healthy and the opposite view that it is weakening. Housing sector and mortgage data have shown deterioration but other reports revealed strong consumer and manufacturing activity.
An unexpected loss of 4,000 jobs in August appears to have helped sway the Fed into ordering a large half percentage point decrease in the federal funds rate last month. Similar weakness in the September data will strengthen the case that the economy might be moving toward recession, which would pressure the Fed to cut rates to stimulate growth.
The Thomson Financial median estimate is for jobs growth of 115,000 last month. However, there are estimates as high as 175,000 floating around the bond market. The higher projections could exacerbate investor nervousness about the economy if September jobs growth proves to be weak or nonexistent.
If the September data points to labor market weakness, Treasurys are likely to rally sharply again as they did last month after the August report.
Earlier there was limited response of a Labor Department report that claims last week rose 16,000 to 317,000 last week, marking the biggest gain since early May. The increase was above median analyst estimates and could indicate that the labor market is slowing under the weight of a deteriorating housing market and a hobbling of global credit markets in August.
However, weekly tallies are volatile and the more reliable four-week continuing claims average dropped by 12,750 to 2.56 million last week, which would indicate a benign labor market.
Jobs creation data, which is always influential, has assumed even greater importance this month as many believe the report will be decisive in determining whether the economy is moving into a recession and whether the Fed will cut rates this month. The Fed, which weighs jobs growth data heavily in setting rates, will hold its monetary policy meeting on Oct. 30-31.
The benchmark 10-year Treasury note rose 8/32 to 101 24/32 with a yield of 4.53 percent, down from 4.54 percent at Wednesday's close. Prices and yields move in opposite directions.
The 30-year long bond gained 16/32 to 103 21/32 with a 4.77 percent yield, down from 4.79 percent late Wednesday.
The 2-year note gained 1/32 to 100 with a yield of 3.99 percent, down from 4.00 percent at its Wednesday close.
The yield on the 3-month Treasury bill dipped to 3.94 percent from 3.95 percent Wednesday and the discount rate fell to 3.84 percent from 3.85 percent.
The market's preoccupation with the September employment report is fueled by the fact that recent data reports have painted a complex picture that allows both for a case that the economy is healthy and the opposite view that it is weakening. Housing sector and mortgage data have shown deterioration but other reports revealed strong consumer and manufacturing activity.
An unexpected loss of 4,000 jobs in August appears to have helped sway the Fed into ordering a large half percentage point decrease in the federal funds rate last month. Similar weakness in the September data will strengthen the case that the economy might be moving toward recession, which would pressure the Fed to cut rates to stimulate growth.
The Thomson Financial median estimate is for jobs growth of 115,000 last month. However, there are estimates as high as 175,000 floating around the bond market. The higher projections could exacerbate investor nervousness about the economy if September jobs growth proves to be weak or nonexistent.
If the September data points to labor market weakness, Treasurys are likely to rally sharply again as they did last month after the August report.
Earlier there was limited response of a Labor Department report that claims last week rose 16,000 to 317,000 last week, marking the biggest gain since early May. The increase was above median analyst estimates and could indicate that the labor market is slowing under the weight of a deteriorating housing market and a hobbling of global credit markets in August.
However, weekly tallies are volatile and the more reliable four-week continuing claims average dropped by 12,750 to 2.56 million last week, which would indicate a benign labor market.
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12:29 a. m.
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