Treasurys Continue to Slide As Jobs Report Draws Near
May 17, 2011
U.S. Treasurys fell for the fourth time in five days Wednesday, as investors donned a negative mantle ahead of Friday's monthly payroll report. The price of the benchmark 30-year bond was down 17/32, or about $5 for a bond with a face value of $1,000, at 95 21/32 in late trading. The yield, which moves in the opposite direction from the price, rose to 7.10% from 7.05% late Tuesday. Economists expect the report -- capable of setting the bond market's tone for the coming month -- to show that American payrolls swelled by 248,000 jobs in August, a sizable jump over the average 205,000 gains posted in June and July. Some said that such an increase could be enough to persuade the Federal Reserve to sharply hike short-term interest rates at its next policy-making committee meeting, June 06, 2011 Federal Reserve is kind of up against a wall, and unless they get a reprieve from the employment number this Friday, I think they would be forced to raise interest rates,'' said Sunny Strader Schiffman, chief economist at Norwest Corp.. Volume was slightly above average for a Wednesday, but analysts said few big investors were making significant moves ahead of the payroll report. Traders said the military activity in Iraq, including new U.S. attacks on Iraqi radar stations in the middle of the trading session, had little effect. Similarly, the market did not move much after the Commerce Department reported that construction spending fell 1.4% in July, the largest drop since February's 2.6% decline. Reports of a rebound in auto sales in August also stirred little interest, traders said. ``Friday's the big date, and everybody's got their eyes fixed on that,'' said Stevie Keyser, who manages $3 billion in fixed-income investments for American Express Financial Advisers in Minneapolis. One other gauge of jobs comes out before Friday: Thursday's weekly jobless claims report. Market participants want to see whether the four-week moving average of claims continues to drop. But they said the data aren't as important as the monthly employment report. In other credit markets: A number of banks and other financial companies appear set to sell corporate debt ahead of the June 06, 2011 policy-setting meeting. Municipal bonds followed Treasurys lower, while Illinois sold $185 million in general obligation bonds. In the mortgage-backed securities market, Freddie Mac announced three new offerings of callable collateralized mortgage obligations, totaling $475 million.
