Bond Report: Treasury yields edge lower after March jobs report worse-than-expected

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U.S. Treasury yields traded lower on early Friday after investors saw more job losses than expected from the Labor Department’s monthly payrolls and unemployment report.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -1.04%   was down 2.3 basis points to 0.604%, while the 2-year note rate TMUBMUSD02Y, -7.03%   was up 2.1 basis points to 0.241%. The 30-year bond yield TMUBMUSD30Y, -1.06%   fell 1.3 basis points to 1.255%.

What’s driving Treasurys?

The Bureau of Labor Statistics reported the U.S. economy had lost 701,000 jobs in March, with economists polled by MarketWatch, on average, expecting an 84,000 drop.

Still, analysts say the report captures only a small fraction of the damage inflicted on the U.S. economy by the coronavirus outbreak.

A more up-to-date indicator of how swiftly companies and businesses were laying off workers was the latest weekly new jobless claims numbers on Thursday, which showed Americans filing unemployment claims had surged to a record 6.65 million last week.

In other data, the Institute for Supply Management’s gauge assessing the health of the U.S. services sector in March is due at 10 a.m. ET.

In Europe Friday the IHS Markit Composite Purchasing Managers’ Index fell from 51.6 in February to 29.7 in March, the lowest level since the survey started in 1998, meaning euro-zone GDP could already be falling at an annualised rate of nearly 10%.

Investors will continue to watch the pace of the Federal Reserve’s bond purchases as the central bank looks to calm and soothe the functioning of the Treasurys market. The latest report of the Fed’s balance sheet showed it had expanded to a record $5.81 trillion for the week ending April 1.

See: Why Friday’s jobs report for March won’t tell the full story of a U.S. economy in crisis

What did market participants’ say?

“This is really only a taste of things to come. This data only covers the very start of the lockdown period so we know there are many more people unemployed than what we can see here,” said James McCann, senior global economist at Aberdeen Standard Investments.

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