"Employers hired 132,000 workers last month following a revised 79,000 October increase that was less than previously estimated, the Labor Department said. The median forecast of economists surveyed by Bloomberg News was for 100,000 jobs, up from an originally reported 92,000 positions."
One month on the job and already the Dems have the economy on an upswing with the best jobs report in months.
Dang! This GOP shit is easy!
Treasuries Head for Biggest Weekly Drop Since June as Jobs Rise
By Deborah Finestone and Elizabeth Stanton
Dec. 8 (Bloomberg) -- U.S. Treasuries fell, extending their biggest weekly decline in almost six months, after a government report showed the economy added more jobs in November than economists forecast.
Two-year notes, more sensitive than longer-maturity debt to expectations for monetary policy, led the decline as traders pared expectations for a first-quarter interest-rate cut by the Federal Reserve. Losses were extended after Treasury Secretary Henry Paulson said he feels ``very good'' about the U.S. economy.
``Every time we get a report that shows the economy's not doing that badly, it's going to push back the market's expectations for when the Fed's easing cycle is going to begin next year,'' said Joseph Shatz, senior government bond strategist in New York at Merrill Lynch & Co., one of the 22 primary government securities dealers that trade with the Fed.
The yield on the two-year note increased 9 basis points, or 0.09 percentage point, to 4.67 percent at 4:35 p.m. in New York, according to bond broker Cantor Fitzgerald LP.
The price of the 4 5/8 percent security maturing in November 2008 fell 6/32, or $1.88 per $1,000 face amount, to 99 29/32. Yields move inversely to prices.
The benchmark 10-year note's yield increased 7 basis points to 4.55 percent. The price of the 4 5/8 percent note maturing in November 2016 fell 15/32 to 100 19/32.
Weekly Changes
On the week, the two-year note's yield is higher by 16 basis points, the biggest increase since the week ended June 16. The 10-year yield is higher by 12 basis points, also the most since mid-June. The yields touched 10-month lows earlier this month amid speculation a slowdown in manufacturing would affect the broader economy.
Employers hired 132,000 workers last month following a revised 79,000 October increase that was less than previously estimated, the Labor Department said. The median forecast of economists surveyed by Bloomberg News was for 100,000 jobs, up from an originally reported 92,000 positions.
``The data continues to suggest the economy's 90 percent good and 10 percent bad,'' said Kenneth Taubes, who oversees $17 billion as head of fixed income at Pioneer Investment Management Inc. in Boston.
The unemployment rate rose to 4.5 percent, in line with the median forecast, from a five-year low of 4.4 percent in October.
`Strong Dollar'
Treasuries extended losses after the dollar increased following Paulson's comments.
``I believe very strongly that a strong dollar is in our nation's best interest, and I feel very good about the strength of our economy right now,'' Paulson said in an interview on CNBC.
The dollar advanced to $1.3201 per euro from $1.3288 yesterday. The dollar reached a 20-month low of $1.3367 per euro earlier this week.
The U.S. currency gained the most against the yen in two months after a report from a Japanese newswire said there was a greater chance the Bank of Japan will not lift interest rates at a meeting in two weeks. The government lowered its estimate of economic growth today.
The yen weakened to 116.37 per dollar from 115.26 yesterday.
``The market is starting to realize that the easing that's priced in for March is not going to happen, because payrolls are pretty good, and you have Paulson saying the economy's on strong footing,'' said Nicolas Beckmann, head of long-term interest rate products at primary dealer BNP Paribas Securities Corp. in New York.
Interest-Rate Futures
Interest-rate futures priced in 34 percent odds of a quarter-percentage point reduction in the Fed's target for the overnight lending rate between banks in March, down from 62 percent yesterday.
``The market needs to see some confirmation of its belief the Fed is at a point it's ready to lower rates,'' said Mark Spindel, who manages about $14 billion of bonds for International Finance Corp., the investment arm of the World Bank in Washington. ``The bond market got ahead of itself.''
The Fed raised rates at each of its meetings from June 2004 to June 2006. Policy makers left borrowing costs unchanged at 5.25 percent at their three meetings since then, saying the increases were still working their way into the economy.
They will do so again at their last meeting of the year on Dec. 12, according to all 88 economists in a Bloomberg survey.
Options traders' expectations for Treasury volatility matched the highest this year because it's unclear what the Fed will do next or when. The Move index, or Merrill Option Volatility Estimate, tracks how much traders expect Treasuries maturing in two to 30 years to fluctuate over the next month. It rose to 75.6 yesterday, the highest since January.
The reading indicates a 68 percent chance that the change in a weighted average of their yields in the coming month would swing within a 75-basis-point range on an annualized basis.
The index reached a record low of 55 on Sept. 20.
``You don't want to take risks because of the wide range of uncertainty in the economy and the lack of value in the Treasury market,'' said Daniel Dektar, chief investment officer at Smith Breeden Associates in Chapel Hill, North Carolina, which oversees $28 billion. ``That uncertainty should translate into some volatility.''
To contact the reporters on this story: Deborah Finestone in New York at dfinestone@bloomberg.net ; Elizabeth Stanton in New York at estanton@bloomberg.net
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