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Bonds Fall on Jobs Data

March 9, 2001

NEW YORK (AP) _ Bond prices fell Friday, sending their yields higher, as a report showing higher-than-expected job growth suggested that the worst of the economic slowdown may be past.

The price of the benchmark 10-year Treasury note fell 1/4 point, or $2.50 per $1,000 in face value. Its yield, which moves in the opposite direction, rose to 4.93 percent compared with 4.90 percent late Thursday.

The 30-year Treasury bond fell 9/32 point to yield 5.32 percent, up from 5.30 percent a day earlier, according to Bridge Telerate news service.

A report Friday from the Labor Department showed that 135,000 workers were added to total payrolls in February, more than expected. That suggested to some economists that the economic situation could be improving, which would lessen the need for future interest rate cuts.

In addition to stimulating lending activity, rate cuts also lift the value of bonds already in circulation by making their fixed rate of return more attractive.

In other trading, short-term Treasury securities fell between 1/16 point and 3/32 point, while intermediate maturities fell between 5/32 point and 7/32 point.

Yields on three-month Treasury bills were 4.71 percent as the discount rose 0.05 percentage point to 4.60 percent. Six-month yields were 4.60 percent, as the discount rose 0.02 percentage point to 4.45 percent. One-year yields were 4.44 percent as the discount rose by 0.04 percentage point from late Thursday to 4.25 percent.

Yields are the interest bonds pay by maturity, while the discount is the interest at which they are sold.

The federal funds rate, the interest on overnight loans between banks, was unchanged from late Thursday at 5.44 percent.

In the tax-exempt market, the Bond Buyer index of 40 actively traded municipal bonds rose 7/32 point to 104 1/2. The average yield to maturity was unchanged at 5.34 percent.

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