* U.S. job growth slowest in nine months
* Fed accommodation expected to continue
By Ellen Freilich
NEW YORK, April 5 U.S. Treasuries rallied on
Friday, letting yields fall to their lowest levels of the year,
after the government's report that U.S. employment grew at its
slowest pace in nine months raised concern that U.S. growth
could slow in coming months.
The government said the U.S. economy produced just 88,000
new jobs last month. The unemployment rate edged lower, but that
was mainly due to people leaving the workforce.
The jobs news when combined with weaker global equity
markets, the Bank of Japan's recently announced monetary
stimulus program, and escalating tension in the Korean peninsula
encouraged investors to buy bonds, pushing yields lower.
"Yields are returning to the lower levels where they should
be," said Robert Tipp, chief investment strategist at Prudential
Fixed Income in Newark, New Jersey.
The benchmark 10-year Treasury note was 17/32
higher after the report, allowing its yield to ease to 1.71
The price of the 30-year Treasury bond extended
an early gain to two points, pushing its yield down to 2.87
percent from 2.99 percent late on Thursday.
"A ton of traders must have fallen out of their seats this
morning after seeing this weak jobs report," said Thomas
DiGaloma, managing director at Navigate Advisors LLC in
The pullback in job growth supported the view that the
Federal Reserve would keep buying bonds to try to keep the
economy on the growth track.
"The Fed will not reduce QE until after (Fed Chairman Ben)
Bernanke leaves the Fed," DiGaloma said, referring to the Fed's
unconventional monetary easing program known as quantitative
easing, "and it will probably continue well after a new Fed
chairperson takes the helm."
The weak jobs report gives the Fed the "greenlight" to stick
with monetary accommodation, agreed Wells Fargo Advisors chief
fixed income strategist Brian Rehling in St. Louis, Missouri.
That policy "will be positive for equities in the long term
and keep interest rates low longer," he said.