Bonds sell off as report cuts bets on stimulus
US Treasuries prices plunged on Friday as a surge in US payrolls surprised investors
New York: US Treasuries prices plunged on Friday as a surge in US payrolls surprised investors who had bought bonds aggressively last week after the Federal Reserve vowed to keep ultra-low interest rates until late 2014.
Benchmark 10-year Treasuries lost one point in price after the US Labour Department said the economy created jobs at the fastest pace in nine months in January, driving the unemployment rate to 8.3 per cent, a near-three year low.
The numbers, which came in way above market expectations, corroborated weeks of strong US econ-omic data and stoked the appetite for risk.
The data reduced the chance of further monetary stimulus from the Fed, economists said. Some traders even started to bet that interest rates could rise in early 2014.
"We're seeing widespread gains across the economy," said Russell Price, senior economist with Ameriprise Financial in Detroit. "It significantly curtails the expectations for any further QE3, or the need for any further quantitative easing."
Ten-year notes dropped 1-4/32 in price to yield 1.95 per cent, the highest yield in more than one week and up from 1.82 per cent late on Thursday.
