The prices of US Treasury securities fell on Friday, with the yields of 10-year notes and 30-year bonds breaking back above important boundaries, as better-than-expected job growth in September dampened the case for more Fed intervention. Benchmark yields were on track for their biggest weekly rise in three months. Ten-year yields moved back above 2 percent, and 30-year yields returned to 3 percent from historic lows.
But volume in afternoon trading was low, as many traders closed out early ahead of a three-day weekend for the bond market. "There hasn't been the volume we would need to believe that something's really going on," said Charles Dugan, managing director of fixed income at Wall Street Access in New York. "The afternoon's been incredibly quiet." Friday's government data on payroll growth beat low forecasts, but the jobless rate remained stuck at 9.1 percent.
The US Labour Department said employers added 103,000 jobs in September, well above the 60,000 predicted by analysts polled by Reuters. The August figure was revised up to a 57,000 increase after it was initially reported at zero. In addition to keeping short-term rates near zero into mid-2013, the Fed this week started its $400 billion "Operation Twist" bond program aimed at lowering long-term borrowing costs and boosting loan activity - whose sluggish growth has worried Fed policymakers.
The 30-year Treasury bond fell 1-12/32 in price for a yield of 3.01 percent, up from 2.94 percent late Thursday, but down from a session high of 3.08 percent. Benchmark 10-year notes fell 22/32 points to yield 2.07 percent, up from 1.99 percent at Thursday's close. The 10-year yield rose 31 basis points this week, its largest weekly jump since early July. The two-year note gave up 2/32 in price for a yield of 0.30 percent, the highest since early August.
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