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Treasuries Take Employment Report in Stride
by Jeff Rose on December 9, 2009
in Bond Commentary
The bond market reacted to last Friday’s better than expected employment report as it typically does to any stronger than expected economic report. Treasury bond prices declined and yields increased and corporate bonds, lower rated issues in particular, outperformed on the day. However, the reaction from Treasuries was relatively muted considering the upside surprise in the employment report and prior reactions in the Treasury market.
On June 5, the release of the May employment report also surpassed expectations with payrolls declining 345,000 versus a consensus forecast of a 520,000 decline and caused a strong sell-off in the Treasury market. On the day of, the 2-year Treasury note spiked by 0.34%, while the 10-year note jumped by 0.12%. Similarly, on August 7, the July employment report showed a decline of 247,000 jobs versus the consensus forecast of a 325,000 decline and Treasury yields also jumped higher [See table] on the day. Last Friday, yield increases of 0.09% and 0.08% for the 2- and 10-year Treasuries was the most muted for an above consensus employment report.
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