Bonds mixed as stocks trim back losses
Investors leave the shelter of government-backed bonds as stocks show slight signs of strength.
NEW YORK (CNNMoney.com) -- U.S. Treasury bond prices were mixed Friday, as a recovery in the stock market overcame concerns about a spike in the national unemployment rate.
The benchmark 10-year note fell 2/32 to 103, while its yield rose to 3.63% from 3.62% a day earlier. Prices and yields move in opposite directions.
The 30-year long bond rose 4/32 to 104, with its yield holding steady at 4.26%.
Meanwhile the short-term 2-year note fell 3/32 to 100 13/32, and its yield rose to 2.22% from 2.18%.
Stock recovery: Investors sold off bonds as the stock market trimmed back its losses.
The major indexes continue to trade lower as labor market troubles continued to pummel the U.S. economy, but a slight recovery in the financial sector helped keep losses to a minimum.
A day before, the Dow industrials sank more than 300 points on job market concerns.
When stock investments show strength, investors often forego the shelter of government-backed bonds and seek higher returns.
Labor trouble: Earlier during trading, stocks plummeted and bonds rose after the government reported that jobless rate had hit a 5-year high.
The nation's unemployment ratesurged to 6.1% in August, according to the U.S. Department of Labor -- up from July's 5.7% level and the highest since September 2003. In addition, the economy suffered a net loss of 84,000 jobs in August, compared with a revised reading of a 60,000 job loss in July.
"It was a weak report, but we had priced it in," said David Ader, head of government bond strategy at RBS Greenwich Capital.
"It was a shocker, but you have to look at this in the context of a week ago," added Ader.
The price of the benchmark 10-year note had risen more than 1 20/32 since trading at 101 12/32 last week Friday.
Investors have been purchasing bonds this week over concerns about further job losses, and worries that the economy will remain sluggish for some time.
Bond prices also rose and yields fell on Thursday after an unexpected rise in weekly claims for unemployment benefits.
Also, earlier this week, the Federal Reserve predicted sluggish economic growth could continue into 2009. 
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