WASHINGTON -- Treasury bonds surged skyward Friday once the initial shock of an apparently stronger-than-expected employment report was shaken off.
The long bond dipped more than 1/2 point after the Labor Department reported a 350,000 advance in nonfarm jobs in November. But then for the rest of the day bonds climbed steadily as economists took a closer look at the report.
Late Friday, the 30-year bond was quoted up a whopping 40 ticks at a price of 95 11/32, pushing the yield down 12 basis points to 7.90%. The 10-year note gained 27/32 to 100 15/32 and a 7.80% yield.
The short end deteriorated for the ninth straight day on Friday, with yields on three-month and six-month bills rising to 5.81% and 6.40%, respectively.
Economists -- worried about future inflation -- were encouraged that total average weekly work hours fell 0.3 hour in November to 34.6 hours after surging in October. Also, average hourly earnings fell two cents to $11.22, while overtime and manufacturing hours were unchanged.
Bonds and notes were also helped by the growing belief that the Federal Reserve is ahead of the curve in its efforts to head off inflation, analysts said. "The long end is comfortable with Fed operations these days," said Kim Rupert, a senior economist with MMS International.
A stronger dollar in recent days and well-behaved commodity prices have bolstered the long end, market observers said.
"We've seen a lot of curve flattening lately," Rupert said, noting that the short end may be a little oversold at this point and ripe for a correction.
Treasury Market Yields Previous Previous Friday Week Month3-Month Bill 5.76 5.41 5.316-Month Bill 6.38 5.98 5.851-Year Bill 6.96 6.55 6.342-Year Note 7.42 7.18 7.023-Year Note 7.56 7.42 7.295-Year Note 7.70 7.64 7.707-Year Note 7.75 7.68 7.8610-Year Note 7.79 7.78 8.0130-Year Bond 7.90 7.93 8.15
Source: Cantor, Fitzgerald / Telerate
Stock Market: The Dow Jones Industrial Average rose 44.75 points Friday, to close at 3745.62.
Foreign Exchange: In late New York trading Friday, the dollar was quoted at 100.60 Japanese yen and 1.5800 German marks.
Commodities: The Commodity Research Bureau's index closed down 1.94 points Friday, at 227.71.