U.S. Government bonds slump as employment growth remain solid; focus remains on presidential election

The U.S. Treasuries were pushed lower across the curve Friday as investors moved away from safe-haven buying as the country’s employers continued a strong pace of hiring in October and boosted wages for workers.

The yield on the benchmark 10-year Treasury note rose 1 basis point to 1.817 percent, the yield on long-term 30-year Treasury also climbed 1 basis point to 2.59 percent and the yield on short-term 2-year note bounced 1-1/2 basis points to 0.826 percent by 12:40 GMT.

The October Labor Department employment situation report revealed a weaker +161k increase in non-farm payrolls, versus the revised +191k result that occurred in September (previous was +157k), below market expectations for a +173k increase. This comes alongside a decrease in the unemployment rate to 4.9 percent, down from 5.0 percent, in line with expectations for a 4.9 percent result.

Meanwhile, average hourly earnings increased 0.4 percent m/m, versus the revised 0.3 percent m/m reading seen in September (previous was 0.2 percent m/m). Additionally, average weekly hours held unchanged at 34.4 in October. Overall, net revisions were stronger for August and September (net +44k revisions).

Despite the weaker than expected headline result, this report shows lingering support for employment conditions. Nevertheless, maintained improvement needs to be seen in order to alleviate caution on behalf of the FOMC regarding concerns elsewhere. On balance, we see this result as likely to provide enough weight to support the Fed raising rates at the December FOMC meeting.

The U.S. presidential election is due on November 8 in which the race between Democrat candidate Hillary Clinton and Republican Donald Trump is narrowing. The market is wary of a Brexit-like outcome at the presidential election on November 8 as recent polls showed a tighter race between the two Presidential candidates.

The RealClearPolitics poll displayed that Democratic nominee Hillary Clinton’s lead over her Republican rival Trump has narrowed down to 2.2 percentage points from more than 7 points two weeks ago.

Meanwhile, the S&P 500 Futures traded 4 points higher at 2,087.50 by 12:40 GMT.