Treasuries Close Firmly In The Red After Pulling Back Off Early Highs

(RTTNews) - After initially showing a strong move to the upside, treasuries pulled back sharply over the course of the trading session on Friday.

Bond prices pulled back well off their early highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3 basis points to 2.373 percent after hitting a low of 2.271 percent.

The turnaround by the ten-year yield came after it fell to its lowest intraday level in almost five months in early trading.

Treasuries initially moved higher following the release of a report from the Labor Department showing much weaker than expected job growth in the month of March.

The Labor Department said non-farm payroll employment climbed by 98,000 jobs in March after surging up by a revised 219,000 jobs in February.

Economists had expected an increase of about 180,000 jobs compared to the jump of 235,000 jobs originally reported for the previous month.

Despite the weaker than expected job growth, however, the unemployment rate fell to 4.5 percent in March from 4.7 percent in February. The unemployment rate had been expected to come in unchanged.

With the unexpected decrease, the unemployment rate fell to its lowest level since hitting 4.4 percent in May of 2007.

Treasuries also benefited from their appeal as a safe haven following news of a U.S. missile strike on a Syrian airbase, although concerns about an escalation of the conflict faded as the day progressed.

The pullback by treasuries was also partly attributed to comments from New York Federal Reserve President William Dudley, who said the Fed might avoid raising interest rates at the same time it starts shrinking its balance sheet.

"Presumably, at the time that you make the decision on the balance sheet you might want to forego the decision on short-term rates just to make sure that the balance sheet doesn't turn out to be a bigger decision than you thought you were making," Dudley said at a luncheon.

The economic calendar for next week starts off relatively quiet but picks up as the week progresses, including with the release of some key data while the markets are closed next Friday.

Reports on retail sales, producer and consumer prices, and import and export prices may attract attention later in the week.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to sell $24 billion worth of three-year notes next Monday, $20 billion worth of ten-year notes next Tuesday and $12 billion worth of thirty-year bonds next Wednesday.