* March US job growth much weaker than expected
* Benchmark yields on track for biggest drop this year
* 10-year and 30-year yields below 200-day moving average
By Chris Reese
NEW YORK, April 6 U.S. government debt prices
surged on Friday, pushing yields to more than three-week lows
after surprisingly weak job growth in March rekindled bets the
Federal Reserve would embark on another round of bond purchases
to stimulate the economy.
The government said U.S. employers added 120,000 jobs last
month, which was the smallest increase since October and well
below economists' expectations for an increase of 203,000 jobs.
"Right now, this is going to keep the Fed in easy-policy
mode," said Sean Incremona, an economist at 4Cast Ltd in New
York. "They're going to want to see a step toward 300,000 before
they start to think about seeing a stronger outlook for the
The benchmark 10-year Treasury note jumped
1-8/32 in price to yield of 2.05 percent, down from 2.19 percent
late Thursday. Ten-year notes were on track for the biggest
single-day drop in yield in more than five months.
Earlier in the week, yields climbed when investors were
disappointed that minutes from the Fed's March meeting did not
give indications of further monetary policy easing, known as
However, Friday's payrolls data changed all that.
"This is a real outlier and brings QE3 back into the
equation as evidenced by the price action in the Treasuries,"
said David Ader, head of government bond strategy at CRT Capital
Group in Stamford, Connecticut.
Friday's price move pushed yields down to within a range
that dominated from November to mid-March. Benchmark yields were
trading at the lowest since March 13, when the Fed had its last
Prices collapsed after the Fed meeting, when the central
bank gave a more optimistic outlook for the economic recovery.
The U.S. Treasury market closed early on Friday ahead of the
Easter holiday weekend.
Thirty-year Treasury bonds last traded 2-15/32
higher in price to yield 3.21 percent, which was the lowest
since March 13 and down from 3.34 percent late Thursday.
Ten-year note yields and 30-year bond yields fell below
their 200-day moving averages, which investors see as signal for
more price gains in Treasuries.
"The bottom line is that as long as Europe is unsettled, as
long as the job market is less than steady, as long as the Fed
keeps pumping new stimulus into the market, yields will stay low
and investors will stay where the water is calm, in Treasuries,"
said Kevin Giddis, managing director of fixed income at Morgan
Keegan in Memphis, Tennessee.