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Bonds round-up: US jobs data sparks sel-off

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Date: Friday 02 May 2008

LONDON (ShareCast) - Sellers of government bonds were out in force today after the release of better than feared US jobs data.

US non-farm payrolls fell by a smaller amount than expected in April, while the unemployment rate unexpectedly headed lower.

Non-farm payroll employment fell just 20,000 in April, substantially below the average monthly loss of 80,000 seen in the first three months of the year and the 78,000 to 85,000 decline expected by economists.

The number of people unemployed was little changed in April at 7.6m, down 0.19m, while the unemployment rate edged down to 5.0% from 5.1% in March; economists had expected a small rise in the unemployment rate.

The data will offer encouragement to the Federal Reserve to call a halt to its round of rate cuts.

Government bond prices on the other side of the Atlantic reacted similarly to US treasuries, falling heavily and thereby pushing up yields.

The yield on the 10-year treasury note rose 9 basis points to 3.85% while the yield on the benchmark 10-year UK gilt climbed 11 ticks to 4.73%. In mainland Europe, the 10-year bund’s yield rose 7 basis points to 4.19%.