Long-dated U.S. Treasury yields were headed lower Friday morning as investors braced for the latest monthly update on the labor market due at 8:30 a.m. Eastern Time that could prove a catalyst for fixed-income markets.
The market for Treasurys will close an hour early on Friday, at 2 p.m., and will remain closed on Monday in observance of the Fourth of the July holiday.
How Treasurys are performing
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The 10-year Treasury note yield
TMUBMUSD10Y,
1.443%
was at 1.447%, compared with 1.479% on Thursday at 3 p.m. Eastern Time. Yields for Treasurys fall as prices rise.
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The 30-year Treasury bond
TMUBMUSD30Y,
2.040%
rate was at 2.045%, versus 2.086% a day ago.
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The 2-year Treasury note
TMUBMUSD02Y,
0.263%
was yielding 0.259%, compared with 0.255% on Thursday.
Fixed-income drivers
Markets are fixated on jobs figures on Friday, ahead of a long holiday weekend.
Economists polled by Dow Jones and MarketWatch expect 706,000 jobs created last month, while the unemployment rate is projected to have dropped to 5.6% from 5.8%.
Investors will be attuned to the data because it could help to determine the Federal Reserve’s approach to tapering monthly bond purchases, currently running at $120 billion.
Fed members already have been discussing the basis by which they would feel comfortable tapering asset purchases, known as quantitative easing, and raising policy interest rates, which currently stand at a range between 0% and 0.25%.
Focus on the health of the labor market has somewhat put in the back seat growing evidence of inflation popping higher in the aftermath of the COVID pandemic.
Bond markets may keep one eye on oil markets also for further signs of inflation, as higher crude-oil prices
CL.1,
-0.16%
can sometimes reflect, at least in the shorter term. The Organization of the Petroleum Exporting Countries and its allies extended a meeting to Friday after it failed to agree on production levels, with crude prices punching higher on Thursday but edging back early Friday.
Outside of the U.S. jobs data, investors will be looking for a report on international trade in goods and services for May also due at 8:30 a.m., with a deficit of $71.2 billion expected, compared with a $68.9 billion deficit in April.
A reading on factory orders for May is due at 10 a.m. and are expected to show a rise of 1.5% on the month.
What strategists are saying
“Today, we have the all important US Jobs report where NFP is estimated at +610K and[the] unemployment tate at 5.7%,” Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities, in daily research note.
“View: We favor selling Treasuries on a rally as 10yr yields approach the 1.38/1.35% area,” he said.
