Bond Report: Treasury yields hold ground ahead of U.S. employment report

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U.S. Treasury yields were unchanged to slightly higher on Friday as investors braced for the October employment report that could indicate if the slowing momentum in the economy spilled over into the labor market.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, -0.05%   was up 0.5 basis points to 1.696%, trading near its 50-day moving average of 1.69%, while the 30-year bond yield TMUBMUSD30Y, -0.03%   rose 1.2 basis points to 2.188%. The 2-year note rate TMUBMUSD02Y, +0.01%   edged up by a single basis point to 1.536%.

On Thursday, yields for the 10-year note and the 2-year note saw their biggest one-day decline since Aug. 5.

What’s driving Treasurys?

Investors will tackle a raft of first-tier U.S. economic data on Friday morning. October’s employment report is due at 8:30 ET, with MarketWatch polled economists estimating gains of 75,000. Analysts also expect the unemployment report to tick slightly higher to 3.6% from 3.5% in September, and average hourly earnings to rise by 0.3%.

The General Motors auto strike, however, could weigh down on last month’s job gains, making it difficult to parse the upcoming labor numbers.

See: U.S. October jobs report is likely to be a big dud, but not because the labor market is tanking

The Institute for Supply Management will issue last months’ reading of its manufacturing activity index at 9:45 a.m. Economists expect the factory gauge to tick up to 49.0%, from 47.8% in the previous month, but all readings below 50 represent a shrinking of economic activity.

In China, the Caixin/Markit manufacturing purchasing managers index came in at a reading of 51.7 in October, its highest reading since Feb. 2017.

What did market participants’ say?

“The potential for a very messy outcome this month is quite elevated,”wrote Peter Schaffrik, global macro analyst for RBC Capital Markets. “Given the high level of uncertainty around this report, it is likely to carry little weight in terms of altering the current economic narrative.”