NEW YORK (CNN/Money) -
Treasury prices jumped Friday after a soft U.S. jobs report revived speculation the Federal Reserve may not raise interest rates as far and fast as the market had feared.
In late trading Friday, the benchmark 10-year note rose 29/32 to 100-30/32 to yield 4.13 percent, down from 4.22 late Thursday. The 30-year bond jumped 1-12/32 in price to 106-28/32 to yield 4.91 percent, down from Thursday's late rate of 4.96 percent. Bond prices and yields move in opposite directions.
The two-year note added 7/32 of a point to 99-27/32 to yield 2.58 percent, and the five-year note rose 19/32 to 99-29/32 to yield 3.40.
Non-farm payrolls rose 96,000 in September, well below forecasts of a 150,000 rise. August's outcome was revised down but that was matched by an upward revision to July jobs. The unemployment rate held at 5.4 percent as expected.
The report will likely be a focal point of the U.S. presidential debate Friday night at 9 p.m. ET as President Bush will likely try to convince the public that the recovery is still underway despite the poor monthly data while Democratic nominee Senator John Kerry will make an attempt to tell voters that Bush hasn't done enough to revive the economy.
A future interest rate hike may also take a cue from the report, as some economists expect the Federal Reserve may take a break from its recent interest rate lifting campaign.
"There is a question of steady increases or taking a pause. I think this data supports a pause, but we still have two more employment reports to consider before the December FOMC meeting, so it's not over yet," Steve Gallagher, an economist at SG Cowen Securities, told Reuters.
The payroll report also pressured the dollar against the euro and the yen.
The euro rocketed up against the dollar, trading at $1.2413 from $1.2291 on Thursday. The dollar dropped to a one-week low against the yen, trading at about ¥109.48 from about ¥110.55 from ¥111.16 on Thursday.
Rising interest rates typically attract funds as investors look for higher returns from fixed-income securities, such as certificates of deposit. When yields on U.S. government debt decline, the dollar looks less appealing.
-- from staff and wire reports
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