By Ellie Ismailidou, MarketWatch
Treasury yields finished this holiday-shortened week
(http://www.marketwatch.com/story/which-markets-are-closed-for-us-independence-day-2015-07-01)
lower after the U.S. Labor Department said that hiring picked up in
June but wages were flat and job gains in the prior two months were
cut.
(http://www.marketwatch.com/story/us-creates-223000-jobs-in-june-unemployment-53-2015-07-02)
(http://www.marketwatch.com/story/us-creates-223000-jobs-in-june-unemployment-53-2015-07-02)
(http://www.marketwatch.com/story/us-creates-223000-jobs-in-june-unemployment-53-2015-07-02)
The report sparked a rally in the Treasury market, as investors
took the news as an indication that the data-dependent Federal
Reserve could use the report as cause to delay the first
interest-rate increase in nearly a decade toward the end of
2015.
Expectations that a rate hike would be delayed lifted appetite
for Treasury bonds and pushed prices higher, driving yields lower.
Meanwhile stocks edged lower
(http://www.marketwatch.com/story/us-stock-futures-steady-ahead-of-june-jobs-report-2015-07-02)and
the dollar traded lower
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CB8QqQIwAA&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Fdollar-trades-lower-after-june-jobs-report-2015-07-02&ei=PDeVVYK3N8jNsAWUirbQBQ&usg=AFQjCNGmC2cN8OCCZWKpdanELlztARczsg&sig2=J4K-aX0SFTJjRO5HYtxBYg&bvm=bv.96952980,d.b2w)against
its main rivals.
"The number keeps rate-hike expectations roughly balanced
between September and December," predicted James Ong, a portfolio
manager at Invesco.
"The headline jobs number is good, but the flat wage growth
indicates that the Fed's 2% inflation target is not likely to
materialize soon," Ong added.
Also, the labor-force participation rate fell, which would
indicate that "at least for one month, the labor market was not
strong enough to entice people to re-enter it," said Christopher
Mier, chief strategist at Loop Capital.
Overall, this was a volatile week for the Treasury market, which
started with a massive rally that sparked the largest one-day yield
decline
(http://www.marketwatch.com/story/treasury-yields-tumble-as-greece-sparks-flight-to-quality-2015-06-29)in
3 years on Greek fears. Tuesday and Wednesday saw some selling that
pushed yield higher, ahead of Thursday's post-jobs report yield
decline.
On balance, the yield on the 10-year Treasury fell 8.7 basis
points over the week and 2.3 basis points on the day to 2.393%,
according to Tradeweb.
The two-year yield declined 5.1 basis points to 0.641% on
Thursday and the yield on the 30-year Treasury fell 0.3 basis point
to 3.191%.
Meanwhile, investors all over the world continued to nervously
watch Greece's negotiations with its creditors, as the country
prepares for a July 5 referendum on its bailout, which is expected
to be a close vote.
Read: Greek debt crisis: Latest news
(http://www.marketwatch.com/story/greek-debt-crisis-latest-news-2015-06-30).
Greek Prime Minister Alexis Tsipras called on Greeks to vote
"no,"
(http://www.marketwatch.com/story/tsipras-vows-to-hold-greek-referendum-wants-to-stay-in-the-euro-2015-07-01)
saying that a negative vote does not mean an exit from the
euro.
European stocks fell
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0CCAQqQIwAA&url=http%3A%2F%2Fwww.marketwatch.com%2Fstory%2Feuropean-stocks-edge-up-as-greece-keeps-investors-wary-2015-07-02&ei=gp2VVZjTOJadygS9o7K4Dw&usg=AFQjCNHhDy8l74H6e0oP6_bdEFqahtqNJA&sig2=rXgM6abZ5toI5mSVVebFBQ&bvm=bv.96952980,d.aWw),
while yields in the eurozone yields rose, after rallying earlier
this week. On Thursday, the yield on the German 10-year known as
the bund, rose four basis points to 0.849%.
The Greek 10-year yield fell 40 basis points to 14.804%, after
rising a total of 440.1 basis points earlier this week.
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