NEW YORK: US government debt prices climbed on Friday, pushing yields to over three-week lows after surprisingly weak domestic job growth in March rekindled bets the Federal Reserve would embark on another round of bond purchases to stimulate the economy.
The government said US employers added 120,000 jobs last month, which was the smallest increase since October, and well below economists' expectations for an increase of 203,000 jobs.
"Right now, this is going to keep the Fed in easy policy mode," said Sean Incremona, an economist at 4Cast Ltd in New York. "They're going to want to see a step toward 300,000 before they start to think about seeing a stronger outlook for the economy."
The benchmark 10-year Treasury note jumped 31/32 in price with a yield of 2.08 percent, down from 2.19 percent late Thursday. Yields dipped to 2.07 percent, marking the lowest since March 13 when the Fed had its last policy meeting. Ten-year notes were on track for the biggest single-day drop in yield so far this year.
Earlier in the week, yields jumped when investors were disappointed that minutes from the Fed's March meeting did not give indications of further monetary policy easing, known as QE3.
However, Friday's payrolls data changed all that.
"This is a real outlier and brings QE3 back into the equation as evidenced by the price action in the Treasuries," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
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