U.S. government bond yields higher after big gains in new jobs

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U.S. Treasury yields were trading higher Friday following a upbeat jobs report that enticed investors into riskier assets and brushed back fears of a looming U.S. recession.

More U.S. jobs were created in November than expected at 266,000, which was the biggest gain since the first month of the year, according to Labor Department data. Economists polled by MarketWatch had forecast 180,000 new jobs last month, but employment rebounded strongly as employees returned to work following a major General Motors Co.












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 strike.

On top of that, the government revised the increase in new jobs in October to 156,000 from 128,000 and September’s gain was raised to 193,000 from 180,000.

The yield on the 10-year Treasury note












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rose 3.7 basis points 1.832%, the 2-year Treasury note












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added 3.5 basis points to 1.617%, while the 30-year Treasury bond












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rose 2.6 basis points 2.272%.

Rates on the benchmark 10-year note initially jumped 5.5 basis points to 1.850% on the heels of the surprisingly strong employment data, but pared some gains by midday as traders digested the report.

U.S. stocks also rallied sharply, putting the Dow Jones Industrial












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 gaining more than 300 points.

Highlights of the jobs report show the unemployment rate slipped to 3.5% from 3.6% to match a 50-year low. The average wage paid to American workers also rose 7 cents, or 0.2%, to $28.29 an hour. The 12-month rate of hourly wage gains slipped to 3.1% from 3.2%.

Read: ‘That’s a lot of jobs!’ economists exclaim after strong payrolls report

“Payrolls benefited from the GM strike-related rebound, but there was broad-based strength outside of auto production as well. There was also a big upward revision to last month as well,” wrote Thomas Simons, senior money market economist at Jefferies, in a research note.

The economist did, however, say that average hourly wages represented a weak point for the for Friday’s jobs report.

“The extent that one can find something negative in this report, [average-hourly earning] was up only 0.2% on the month,” he wrote. That reading suggests that inflation remains sluggish, running below the Federal Reserve’s annual 2% target.

The robust jobs growth also could make the Fed less reluctant change benchmark rates at next week’s Federal Open Markets Committee (FOMC) meeting.

“Overall, this positive report should provide no reason for the Federal Reserve to move away from a “hold” stance towards future rate cuts,” said Doug Duncan, chief economist at housing giant Fannie Mae












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in prepared commentary.

Read: Fed is ‘super-glued’ to its seat until after the election, economists say after stellar jobs report

But Duncan also pointed to a modest decline in residential construction jobs that suggests those hoping for “an acceleration of housing supply growth will be disappointed.”

U.S. consumer sentiment data showed a slight improvement for December, with the University of Michigan’s gauge rising to a preliminary 99.2 reading, from a final November reading of 96.8, and beating forecasts of 96.9.

Beyond economic reports, bond traders have been watching for progress toward a China-U. S. trade resolution. Some positive signs have helped lift stocks and undercut appetite for haven bonds, which have benefited from worries about escalating hostilities on trade.

China’s State Council on Friday began the process of exempting some soybeans and pork imported from the U.S. from punitive tariffs, the state-run Xinhua News Agency said.



Source : MTV