US Treasury prices jumped on Friday as yet another disappointing jobs report was viewed as reducing the chances the Federal Reserve will begin raising interest rates soon.
The employment figures lifted prices on two-year notes, the maturity most sensitive to thinking on official rates, dragging yields down to 1.75 percent from 1.84 percent late on Thursday.
Likewise, Eurodollar futures climbed across the board as the market trimmed the risk of rate hikes this year.
"The jobs numbers are still not up a whole heck of a lot, which means that the Fed is in no rush to do anything," said Gerald Lucas, chief Treasury strategist at Banc of America Securities.
Nonfarm payrolls rose 112,000 in January, below forecasts of a 150,000 gain and well short of market whispers of 200,000 or more.
The December total was revised up slightly to a gain of 16,000, but that was a lot less than many economists had hoped for.
After revisions, job growth has run at only 73,000 a month since turning positive in September, well below the 150,000 or so needed to absorb the natural expansion of the labour force.
The size of the labour force has actually been shrinking as discouraged workers give up looking for a job, and the unemployment rate dipped to a two-year low of 5.6 percent in January from 5.7 percent the month before.
"When strange things are going on with the labour force, the unemployment rate becomes less important and we assume the Fed is far more focused on the payrolls report," said J.P. Morgan's Glassman.
"It would take many months of sustained strength in payrolls for the Fed to even consider hiking, which is why we don't see a move until late this year, or maybe 2005," he added.
Having spent the last few weeks anguishing over possible outcomes for the jobs report, the actual numbers were something of an anti-climax.
The benchmark 10-year note gained 22/32 in price, taking yields down to 4.08 percent from 4.18 percent late on Thursday.
The five-year note added 14/32, compressing yields to 3.09 percent from 3.19 percent. Thirty-year bonds climbed just over a full point, taking their yield to 4.92 percent from 4.99 percent.
Traders noted the market had underlying support from foreign central banks, which were still buying up Treasuries as part of their efforts to restrain the dollar's fall and slow the appreciation of their own currencies.
Data from the Fed late Thursday showed its custody holdings of Treasuries held on behalf of overseas central banks climbed $9.62 billion in the week to Wednesday, reaching a record $894.19 billion.
Much of that money was thought to have come from the Bank of Japan, which has been intervening heavily in recent weeks and months to prevent an export-damaging rise in the yen.
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