US Yields Fall to 3-Month Lows After U.S. Adds Fewer Jobs

Treasury 10-year note yields fell to a three-month low after a report showed payrolls climbed less than projected in September, indicating the U.S. economy had little momentum leading up to the federal government shutdown.

European, Canadian and emerging-markets debt also rallied as the payrolls report added to speculation that the Federal Reserve will maintains its U.S. bond-buying program into next year, which has helped to keep borrowing costs low worldwide. The Treasury’s auction of $35 billion of one-month bills attracted demand at close to the pre-government shutdown average seen for the securities this year as investor concern that the U.S. may default ebbed.

“Yields aren’t headed higher, certainly, in the face of this report,” said Bill Gross, the co-chief investment officer at Newport Beach, California-based Pacific Investment Management Co., in an interview on Bloomberg Radio with Tom Keene. “We will grudgingly go lower from this point. We probably won’t be tapering anytime soon.”

The benchmark U.S. 10-year yield fell nine basis points, or 0.09 percentage point, to 2.51 percent at 2.41 p.m. New York time, Bloomberg Bond Trader data showed, the lowest since July 24. The price of the 2.5 percent note due in August 2023 rose 3/4, or $7.50 per $1,000 face amount, to 99 28/32.

The yield touched 3.005 percent on Sept. 6, breaching 3 percent for the first time since July 2011. Its 10-year average is 3.56 percent.

“The 10-year, at 2.50 percent, belongs where it is at the moment,” Gross said.

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Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell