U.S. Treasury yields trade steady before March jobs report

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What could rattle markets in 2021, even as vaccines are rolling out


U.S. Treasury yields held their ground on Friday before what some are billing as a blowout employment report for March.

The bond market will remain open until 12 p.m. ET in observance of the Good Friday holiday, even as European exchanges and most other U.S. markets are shuttered.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.682%

was flat at 1.679%, while the 2-year note rate
TMUBMUSD02Y,
0.168%

rose a basis point to 0.170%. The 30-year bond yield
TMUBMUSD30Y,
2.338%

edged 0.2 basis point down to 2.337%. Bond prices move inversely to yields.

What’s driving Treasurys?

All eyes will rest on the U.S. Labor Department’s March jobs report as investors look for additional signs that the U.S economy is building momentum. MarketWatch-polled analysts have penciled in a forecast of 675,000, which would represent the biggest employment increase since October.

The unemployment rate is expected to fall to 6%, from 6.2% in February, while average hourly earnings are forecast to rise by 0.1%.

Yet even if the jobs report delivers on the market’s high expectations, the U.S. economy will still remain several million jobs away from pre-pandemic levels.

Read: Why the jobs report will be important, even if no one is around to trade it

This piece of crucial economic data will arrive when liquidity is likely to be thin due to the Good Friday holiday. That could exacerbate any wild swings in the bond market, following the jobs report.

What did market participants say?

“There are all sorts of conversations going on and people freely bandying about +1m or more gain in employment tomorrow. It’s hard to argue against it,” said Tom Porcelli, chief U.S. economist for RBC Capital Markets.

But he cautioned that March has been a difficult month to forecast due to the extension of federal unemployment benefits and the quickening re-opening of the U.S. economy.



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