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Bond Report: U.S. Treasury yields hold ground before jobs report

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U.S. Treasury yields were steady in early Friday action, as traders braced for a jobs report that is expected to reveal that 1 million new jobs were created in April.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.566%

was up 0.9 basis point to 1.570%, while the 2-year note yield
TMUBMUSD02Y,
0.156%

was at 0.153%. The 30-year bond yield
TMUBMUSD30Y,
2.232%

edged lower 0.3 basis point to 2.233%.

What’s driving Treasurys?

The U.S. Labor Department will release its nonfarm employment report on Friday at 8:30 a.m. ET. The average estimate is for the U.S. economy to have added one million new jobs last month, but some analysts were even forecasting gains north of 2 million.

See: A million new jobs? That’s how many Wall Street thinks the U.S. created in April

Yet the Treasurys market has grinded lower throughout this week despite the elevated expectations for a stellar jobs report. An improving labor market, especially in the pandemic-battered services sector, could nudge the Federal Reserve toward the process of lifting off from its easy-money policies.

But senior Federal Reserve officials have insisted it was too soon to discuss tapering its asset purchases after Fed President Robert Kaplan broke ranks with the central bank’s dovish stance this week.

What did market participants say?

“Assuming we get a strong consensus number, markets will quickly question what this means for the Fed. And there has been an absolute plethora of Fed speak this week and all geared the same way: we are not thinking about, thinking about tapering,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

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