January 08, 2010 |
|Treasury prices were slightly lower Thursday as investors braced themselves for the government's employment report.|
What prices are doing: The benchmark 10-year bond fell less than 1/32 to 96-10/32, and the yield was 3.83%. Bond prices and yields move in opposite directions.
The 30-year bond dropped 2/32 to 94-31/32 and its yield rose to 4.7%. The 2-year note was flat at 99-30/32 and yielded 1.04%.
On Wednesday, Treasurys were down on upbeat jobs reports, dimming the appeal of bonds as safe havens for investors.
What's driving prices: "We're right in front of tomorrow's (Friday's) employment data, and that's definitely going to be a market mover," said Bill Larkin, a portfolio manager at Cabot Money Management.
The Labor Department's monthly payroll report is due Friday. Economists expect a decline of 35,000 jobs, according to a consensus estimate from Briefing.com. That compares to a drop of 11,000 the previous month.
The Treasury Department said Thursday it is auctioning off $159 billion of debt next week. Larkin said that while this is a big number, it was somewhat expected, and bond prices won't be affected until the results are announced next week.
What analysts are saying: Positive employment data on Friday will boost yields and pressure bond prices, said Larkin.
"We could have the chance to get the yield up, and once the yield starts rising, it's going to bring to light that this zero interest rate policy has to end," he said.
Larkin said that going into 2010, investors will look at earnings results and retail sales to gauge the level of economic recovery.
By Blake Ellis