|
Bonds edge higher
|
 |
March 3, 2000: 3:27 p.m. ET
A job report suggesting slower growth lifts Treasurys, but stocks still favored
By Staff Writer Jill Bebar
|
NEW YORK (CNNfn) - Treasury securities edged higher after a report suggested slower U.S. job growth, alleviating investors' fears of aggressive interest rate hikes from the Federal Reserve.
However, a soaring U.S. stock market, with the three major indexes sharply higher in late trading, limited gains in bonds as investors chased more profitable trades.
Shortly after 3 p.m. ET, the 30-year bond rose 5/32 to 101-23/32. Its yield, which moves inversely to its price, fell to 6.12 percent from 6.15 percent Thursday. The 10-year Treasury note rose 3/32 to 101-27/32, its yield falling to 6.38 percent from 6.40 percent Thursday.
Job growth slows
The government's employment report for February suggested that wage growth is tame despite tightness in the labor market. The pace of U.S. job growth slowed considerably in February, with 43,000 non-farm jobs added to the economy compared with a revised 384,000 in January. The non-farm jobs figure was sharply lower than analysts' forecasts for February of 235,000.
Also, the nation's unemployment rate rose to 4.1 percent from 4.0 percent in January, according to the U.S. Labor Department.
Average hourly earnings, a measure of inflation that is thought to be closely watched by Federal Reserve Chairman Alan Greenspan, rose 0.3 percent to $13.53, in line with expectations.
Hikes still on the horizon
The report allayed fears of aggressive action from Greenspan, such as a one-half percentage point tightening. But, analysts still expect the U.S. central bank to increase rates by one-quarter percentage point when it meets March 21 in order to slow the economy and pre-empt rising inflation.
"The report didn't do anything to change the view the Fed will tighten on March 21," said Bill Quan, senior economist at Aubrey G. Lanston.
Scott Graham, head government trader at Prudential Securities, agreed. "This will not alter Greenspan from his tightening course. As long as consumer demand remains healthy, he will be vigilant on the inflation front."
David Horner, senior financial strategist at Merrill Lynch told CNN's Ahead of the Curve that the Fed will likely increase rates by a "gradual" approach. (88.2K WAV) (88.2K AIFF)
The Fed has raised short-term interest rates four times since June in an effort to slow the U.S. economy. Despite the central bank's efforts, consumer spending and confidence remain strong and the economy is now in its record 108th month of expansion.
Meanwhile, there was little reaction to a separate report from the Commerce Department that said U.S. factory orders fell 1.1 percent in February against a revised 3.8 percent gain in December.
(Click here for a look at Briefing.com economic calendar.)
The week ahead
Next week's economic calendar is light with the only notable report coming Tuesday. That is when the government releases revised productivity figures for the fourth quarter. Analysts said the market will continue to focus on movements in U.S. equities. In recent weeks, gains in stocks have negatively impacted bonds as investors relocate assets to stocks from Treasurys.
Investors await details on the U.S. Treasury's buyback program. 30-year bonds received support from speculation that the Treasury would conduct the first buyback operation or provide further details. Faced with a budget surplus, the Treasury Department in late January announced plans to reduce the issuance of long-term debt.
The corporate bond calendar will also garner attention with a $4 billion to $5 billion seven-year Fannie Mae issuance and several smaller deals expected to enter the market. The higher yields from corporate and agency bonds could draw investors from Treasurys.
Dollar strengthens
The dollar strengthened against the major currencies Friday. Shortly before 3 p.m. ET, the dollar traded at 107.81 yen, up from 107.73 yen Thursday, a 0.07 percent gain in the dollar's value.
Meanwhile, the euro traded at 96.19 U.S. cents, down from 96.36 cents Thursday, a 0.18 percent gain in the dollar's value.
Analysts expect the currency markets to be calm in the week ahead on the heels of volatile activity, including the dollar's plunge to a one-month low against the yen on Wednesday. 
|
|
|
|
|
 |
|
