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Markets & Stocks > Bonds & Rates
Bond yields move higher
Better-than-expected jobless report fuels notion that Fed may raise rates sooner than anticipated.
November 7, 2003: 5:12 PM EST

NEW YORK (CNN/Money) - Treasury prices stumbled lower Friday after a drop in jobless claims suggested the labor market was on the cusp of a turnaround.

At about 5:05 p.m. ET, two-year notes dipped 2/32 of a point in price to 99-8/32, with a yield of 2.01 percent, while the five-year note fell 5/32 of a point to 98-19/32, yielding 3.43 percent.

The 10-year note slid 7/32 of a point in price to 98-16/32, ramping yields up to 4.44 from 4.42 percent late Thursday. The 30-year bond dropped 4/32 of a point to 101-23/32 for a yield of 5.26 percent, unchanged from late Thursday.

Non-farm payrolls climbed 126,000 in October, when analysts had looked for a rise of about 58,000. September's result was revised to an increase of 125,000 jobs from an initial gain of 57,000. Even August's result was revised to an increase, meaning jobs have now risen for three months in a row.

The unemployment rate also ticked down to 6 percent, confounding expectations of holding steady at 6.1 percent. Traders had been primed for an upbeat number after strong jobless claims and industry surveys, but they conceded the revisions changed the whole tenor of the labor market.

"Right out of the gate, it's a better number, obviously," Brian Pears, head of equity trading at Victory Capital Management, told Reuters. "There could be a problem once the numbers get torn apart a little bit, but I think the market had to see a strong number to justify the rally we've had the past couple of days.

Currency Exchange

"At least the headline is strong enough to justify what we've had already. Positive numbers confirm what we knew about the economy -- that it's growing stronger than we thought it was even a month ago."

The dollar gave up its gains from the previous session as investors who bid up the greenback ahead of the jobs report decided to take their profits and head home for the weekend.

The euro bought $1.1528, up from $1.1408 late Thursday. The dollar bought ¥109.36, down from ¥110.25.

"Day traders saw the good numbers, embraced the dollar and got overextended. But the rally ran out of steam and they had to turn tail and cover their positions," John Hazelton, director of foreign exchange at PNC Bank in Pittsburgh, told Reuters.

"In essence they met some decent euro/dollar bids from Europeans' closing their books for the weekend, and that forced them to [sell the dollar]," he said.  Top of page

--from staff and wire reports

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