By Luciana Lopez
NEW YORK, April 5 (Reuters) - U.S. Treasuries prices jumped
on Friday and yields fell to their lowest this year after data
showed far fewer jobs were created than expected in March,
fueling worries the beleaguered labor market will drag on the
The Labor Department said the U.S. economy produced just
88,000 new jobs last month - less than half the 200,000 expected
in a Reuters poll, and below even the lowest estimate in the
'It caught a lot of people offside and they are scrambling
to get back into bonds,' said Bill Irving, portfolio manager at
Fidelity Investments in Merrimack, New Hampshire.
'The pace of growth will be slow but we will still get 2
percent. Yields will remain very low, but I don't expect we will
get back to the record lows we saw last summer,' Irving said.
Benchmark 10-year Treasury notes rose 17/32,
their yields falling to 1.708 percent from 1.76 percent late
Thursday and from 2.06 percent less than four weeks ago.
Analysts argued the weak report would likely keep the U.S.
Federal Reserve buying bonds to try to keep the economy on a
'Today's report pushes out the date at which the Federal
Reserve may reduce its purchases of securities,' said Brian
Jacobsen, chief portfolio strategist at investments group of
Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
The Fed is buying $85 billion of Treasuries and
mortgage-backed securities each month to boost growth and
Friday's data came after other labor market indicators this
week, including jobless claims, also pointed to a stumbling
With investors still worried about the euro zone, days after
bruising negotiations for a Cypriot bailout, analysts say the
Fed will keep interest rates low for a long time to buoy growth.
As a result, 'the market has been rallying and rates are
much lower than what would have been expected,' said Tanweer
Akram, senior economist for global rates, fixed income at ING
Investment Management in Atlanta.
The price of the 30-year Treasury bond rose
2-13/32 and its yield fell to 2.873 percent from 2.99 percent
late on Thursday and 3.26 percent nearly four weeks ago.
'Yields are returning to the lower levels where they should
be,' said Robert Tipp, chief investment strategist at Prudential
Fixed Income in Newark, New Jersey, with more than $1 trillion
in assets under management.
Ten-year Treasury yields slipped below 2 percent in
mid-March and have traded there ever since, but they might not
go much lower, said Daniel Heckman, senior fixed-income
strategist at U.S. Bank Wealth Management in Minneapolis.
'The bond market has gotten a little bit ahead of itself,'
he said. 'I would not be chasing it at this point. Yields have
built in quite a bit of economic weakness here.'
A test of the market's appetite for Treasuries at these new
high prices and low yields comes next week when the Treasury
will sell three-, 10- and 30-year government debt.
'If demand at the Treasury auctions is weak, that could show
investors have gotten a little too pessimistic on the economy
and too bullish on the bond market,' he said.
(Additional reporting by Ellen Freilich and Richard Leong;
editing by Andrew Hay)
Keywords: MARKETS USA BONDS/
(--------------------- MARKET SNAPSHOT AT 1611 EDT (2011 GMT) --------------------- June T-Bond 147-27/32 (+1-16/32) June 10-Year note 133-1/32 (+ 6/32) Change vs Current Nyk yield Three-month bills 0.065 (+0.00) 0.066 Six-month bills 0.095 (-0.01) 0.096 Two-year note 100-1/32 (unch) 0.230 Five-year note 100-10/32 (+2/32) 0.686 10-year note 102-21/32 (+17/32) 1.708 30-year bond 105-1/32 (+2-13/32) 2.873 DOLLAR SWAP SPREADS LAST Change U.S. 2-year dollar swap spread 14.25 (-1.00) U.S. 3-year dollar swap spread 15.50 (-1.00) U.S. 5-year dollar swap spread 18.25 (-1.00) U.S. 10-year dollar swap spread 17.00 (+0.50) U.S. 30-year dollar swap spread -8.50 (+1.25))
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