Bonds rise, dollar sinks on jobs
Employment growth slows in April, suggesting slower economic growth, but wages tick higher; dollar falls sharply.
NEW YORK (CNNMoney.com) - Bond prices rose Friday after a highly anticipated report on employment showed job growth slowed last month to its weakest since last summer's hurricanes.
The dollar fell sharply, touching a one-year low against the euro and a seven-year low against the yen.
The benchmark 10-year Treasury note added 8/32 to 95-8/32 to yield 5.12 percent, down from 5.15 late Thursday.
The 30-year bond rose 17/32 to 88-12/32, yielding 5.21 percent, down from 5.24 in the previous session. Bond prices and yields move in opposite directions.
The five-year note gained 6/32 to yield 4.99 percent, and the two-year note was up two ticks, yielding 4.94 percent.
The Labor Department said employers added 138,000 jobs in April, down from a revised 200,000 added in March. Economists surveyed by Briefing.com had forecast a 200,000 net gain in payrolls. (Full story.)
Treasuries gained after traders saw the weaker-than-expected report as a sign that the economy may not be growing as strong as previously thought and that the Federal Reserve may pause its 22-month old rate-hiking campaign soon.
Market watchers widely expect the Fed to raise the target for its key short-term interest rate for the 16th straight time to 5 percent next week, but whether the central bank will keep raising rates beyond then remains unclear.
The jobs report also showed the unemployment rate remained at 4.7 percent, in line with estimates, but average wages rose more than expected. The average hourly wage was up 9 cents, or 0.5 percent, to $16.61.
Bond investors have been concerned the strong labor market will drive up wages and increase inflationary pressures, but on Friday they seemed to focus on the softness in the overall payroll number -- the lowest number of jobs added to the economy since October, when the labor market was still suffering from a slowdown after hurricanes Katrina and Rita.
The greenback sank as lower interest rates generally hurt the dollar as it makes dollar-denominated securities less attractive to foreign investors.
In currency trading, the euro rose to a session high of $1.2765 before pulling back to $1.2738, up from $1.2714 late Thursday. The dollar traded as low as ¥112.26 before paring some losses to ¥112.43, down from ¥113.46 in the previous session.
-- from staff and wire reports
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