Bonds

10-year Treasury yield falls even after strong jobs report

The 10-year U.S. Treasury yield dipped on Friday even after a key October jobs report came in stronger than expected

The yield on the benchmark 10-year Treasury note fell 6 basis points to 1.46%. The yield on the 30-year Treasury bond dipped 7 basis points to 1.89%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Treasurys


October nonfarm payroll numbers showed 531,000 jobs added, higher than the Dow Jones consensus estimate of 450,000. The unemployment rate nudged down 0.2 percentage points to 4.6%.

The Federal Reserve earlier this week announced it will begin to taper its bond purchases. The Fed announced Wednesday that it will begin to pull back its $120 billion monthly bond-buying program "later this month."

The central bank is set to reduce its bond purchases by $15 billion per month, meaning its quantitative easing should end by the middle of 2022.

However, Gurpreet Gill, macro strategist of global fixed income at Goldman Sachs Asset Management, said on Wednesday that "surprises on the path of the pandemic, inflation, expectations for inflation, or wage growth could prompt a changed taper pace and impact the rate outlook."

Gill noted that yields on short-dated U.S. bonds had risen less than those in other markets on hawkish central bank talk, but said this was because the Federal Open Market Committee had indicated its first interest rate hike would require fuller employment.

"If inflation stays far above target in 2022 however, we think the Fed may begin to say that remaining weakness in labor supply is structural and hint at rate hikes," he said. However, Gill added that if inflation begins to ease, the Fed may wait for a fuller recovery in the jobs market before raising rates.

Pippa Stevens contributed to this market report.