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Treasury Five-Year Notes Advance as Bernanke Predicts Slow Growth in Jobs

January 9, 2011 Comments off

Treasury five-year notes had the first back-to-back weekly gains since October as U.S. payrolls grew less than forecast and Federal Reserve Chairman Ben S. Bernanke said the labor market’s recovery will be gradual.

Yields on the notes touched the lowest level in two weeks yesterday after Labor Department data showed nonfarm payrolls expanded by 103,000 last month, versus a median forecast of 150,000 in a Bloomberg News survey. The Treasury will sell $66 billion in securities next week in the year’s first note and bond auctions.

“The five-year leads the way up, and it leads the way down,” said Brian Edmonds, head of interest-rates at Cantor Fitzgerald LP in New York, one of central bank’s 18 primary dealers. “The Fed chairman is setting expectations back further and making people aware that there aren’t a lot of quick fixes and it’s not going to turn on a dime.”

The yield on the five-year note fell five basis points yesterday, or 0.05 percentage point, to 1.96 percent, from 2.01 percent on Dec. 31, according to BGCantor Market Data. It touched 1.93 percent, the lowest since Dec. 21. The yield hadn’t declined for more than a single week at a time since Oct. 8.

Benchmark 10-year note yields rose three basis points to 3.32 percent, from 3.29 percent at the end of last week. Two- year note yields were little changed at 0.59 percent. Read more…