Bonds: Treasuries gain despite 'robust' jobs data

Date: Friday 02 Dec 2011

The borrowing rate on a 10-year US Treasury fell 3.7bp to 2.05% today, despite reaching a high of 2.16% earlier on, as investors looked cautiously ahead to a key EU summit next week.

Treasuries declined sharply after the Labor Department revealed that the US jobless rate fell from 9% to 8.6%. "The November employment report took a robust tone and signaled that payroll growth in the US is accelerating into year-end," said analyst at Barclays Capital.

However, US bonds quickly recovered as markets digested slower-than-expected jobs growth and concerns over a Spanish downgrade. Meanwhile the Federal Reserve bought around $5.1bn in 30-year bonds today, more than most expected.

Spanish 10-year bond yields fell to 25bp to 5.48% earlier on, but were down just 6bp at 5.68% as downgrade rumours circulated.

The yield on a 10-year UK gilt rose by 2.6bp to 2.29%, while the borrowing rate on a 10-year German bund fell 4.3bp to 2.13%.

BC

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