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Bonds jump on jobs data
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June 2, 2000: 3:39 p.m. ET
Expectations of less aggressive Fed lift prices; dollar falls vs. euro, yen
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury securities ended the week sharply higher Friday after a slew of weak economic reports, including May employment data, fueled expectations that the Federal Reserve may not need to hike rates aggressively in the coming months.
In the currency markets, the dollar declined against the major currencies after the jobs report signaled a slowdown in the economy.
 Shortly after 3 p.m. ET, the 30-year Treasury bond rose 2/32 of a point in price to 104-10/32. The yield, which moves in the opposite direction to price, fell to 5.94 percent from 5.95 percent Thursday.
The 10-year note, which now is considered by many as the market benchmark, gained 8/32 to 102-16/32, its yield retreating to 6.15 percent from 6.20 percent.
During the week, the market had a big run up, with the yield on the Treasury bond dropping to 5.94 percent from 6.06 percent last Friday. Investors cheered a number of tame reports, including May manufacturing activity and April construction spending, which signaled the Fed's current tightening cycle was beginning to take some steam out of the economy.
Friday's employment data supported that belief. The economy created 231,000 jobs in May, compared with a revised 414,000 in April,  according to the Labor Department. The number was well below Wall Street forecasts of a 375,000 gain. The unemployment rate rose to 4.1 percent in May from 3.9 percent the prior month, and average hourly earnings rose 0.1 percent, less than the 0.4 percent expected.
Michelle Girard, strategist at Prudential Securities, told CNNfn's market coverage the report showed "pervasive" weakness. (240K WAV) (240K AIFF)
With a booming economy, the Fed has raised short-term interest rates six times since last June, and last month it hiked rates by half a percentage point. Prior to this week's data, most analysts expected at least one more hike, and now many think the tightening may be near its end. The next Fed meeting is scheduled June 27-28.
Following the release of the jobs data, both the 30-year bond and the 10-year note surged over a full point. But robust gains in the equities market caused Treasurys to pare some gains. In late trading, all three major U.S. stock indexes were sharply higher, with the Nasdaq composite index gaining more than 6 percent.
Participants were not surprised that Treasurys surrendered some gains. "It's hard to sustain a bond market rally with stocks doing as well as they're doing," said John Santoro, head of government trading at SG Cowen Securities.
Investors frequently shift money into the relative safety of government securities when stocks decline.
In other economic news, U.S. factory orders fell 4.3 percent in April, the largest drop since November 1990.
(Click here for a look at Briefing.com's economic calendar.)
Dollar tumbles
The U.S. dollar dropped against the major currencies Friday following the release of the employment report. The euro rose to a six-week high against the dollar, breaking above a key technical level at 94.30 cents.
"Today you got a hint that the U.S. economy might be slowing and that pressured the dollar," said Alison Montgomery, currency economist at IDEAglobal.com.
 With expectations of a rate hike by the European Central Bank next week, analysts said the data will bring the U.S. and Europe's interest rates closer together.
Shortly after 3 p.m. ET, the euro was at 94.27 cents, up from 93.18 cents, a 1.2 percent loss in the dollar's value. Meanwhile, the dollar traded at 108.25 yen, down from 108.51 yen Thursday. 
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