U.S. Treasuries rally ahead of January labour market report

The U.S. Treasuries rallied during Friday’s afternoon session ahead of the country’s labour market report for the month of January, scheduled to be released today by 13:30GMT.

The yield on the benchmark 10-year Treasury yield slumped 4 basis points to 1.604 percent, the super-long 30-year bond yield plunged nearly 5 basis points to 2.067 percent and the yield on the short-term 2-year lost a little over 3 basis points to trade at 1.415 percent by 11:40GMT.

All eyes today will be on the US payrolls report, which is currently expected to show a slightly stronger increase in January (160k) than December, albeit a touch below the average for the past year as whole, Daiwa Capital Markets reported.

But the surprising strength of the ADP report released on Wednesday – the 291k increase was the largest since May 2015 – suggests that risks to this forecast are skewed to the upside. Further, the unemployment rate is expected to move sideways at 3.5 percent, while average weekly earnings growth is expected to be little changed at 2.9 percent y/y, the report added.

This afternoon will also see the Fed publish its semi-annual Monetary Policy Report, which will be followed by Chair Powell’s testimony to the Senate and House committees next week, Daiwa further noted in the report.

Meanwhile, the S&P 500 Futures remained tad -0.36 percent down at 3,333.12 by 11:45GMT.