BOND REPORT: Treasury Yields Edge Higher As Traders Await Jobs Report

By Mark DeCambre, MarketWatch Features Dow Jones Newswires

U.S. Treasury yields inched higher on Friday as investors awaited an important gauge of the labor market in October, which could help Wall Street determine if sluggish wage growth and inflation will persist.

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The nonfarm-payrolls report due at 8:30 a.m. Eastern comes a day after President Donald Trump nominated Fed Gov. Jerome Powell (http://www.marketwatch.com/story/imagining-life-under-a-jerome-powell-fed-2017-10-20) to replace Chairwoman Janet Yellen as the head of the Federal Reserve and after the central bank concluded its most recent policy gathering on Wednesday.

What are Treasury yields doing?

The yield on the 10-year Treasury note was at 2.356%, compared with 2.347% late Thursday. The 2-year note yield was yielding 1.617%, versus 1.608% in the previous session, while the 30-year bond yield ticked up to 2.833%, from 2.829%.

Bond prices move in the opposite direction of yields.

What is driving markets?

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Economists polled by MarketWatch expect 325,000 new jobs were added to the U.S. economy (http://www.marketwatch.com/story/get-ready-for-a-huge-jump-in-october-payrolls-2017-11-02) in October, compared with a loss of 33,000 jobs in September, when Hurricane Irma and Hurricane Harvey devastated Houston, parts of Louisiana and slammed Florida's coastline.

Investors will be looking for any lingering effects of the storms on the labor market, with signs of a strong jobs market likely cementing the Fed's plan to raise interest rates in December. Wall Street is pricing in a more than 98% chance of a rate increase next month, according to CME Group data (http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html).

On Thursday, the House Ways and Means Committee released details on the long-awaited Republican tax reform (http://www.marketwatch.com/story/heres-a-breakdown-of-how-the-new-house-tax-bill-impacts-business-taxes-2017-11-02), while President Donald Trump's nominated Powell (http://www.marketwatch.com/story/text-of-powells-statement-on-being-named-fed-chairman-nominee-2017-11-02) as the next head of the U.S. central bank. Powell is considered a candidate whose measured approach to normalizing crisis-era monetary policy most closely align with Yellen, whose term as the leader of the Fed ends in February.

What are strategists saying?

"On his fundamental economic views, Powell has been in line with the consensus FOMC thinking, with his speeches indicating that he's fully on board with themes of lower potential growth and lower neutral interest rates. As such, his leadership is not likely to represent a structural shift in terms of the key views shaping the medium-term monetary policy outlook," wrote Morgan Stanley economists led by Ellen Zentner and Robert Rosener in a Thursday research report.

What other data and Fed speaker are in focus?

What other assets are in focus?

The U.K. 10-year government bond yield was at 1.267%, versus 1.261% after the Bank of England on Thursday raised interest rates for the first time (http://www.marketwatch.com/story/boe-delivers-a-typical-dovish-hike-analysts-react-to-historic-uk-rate-rise-2017-11-02)in a decade, but signaled that policy makers still harbored some concerns about the U.K. economy and inflation as Britain renegotiates trade agreements after voting last year to exit from the European Union.

The yield on the 10-year German bond , known as the bund, was at 0.367%.

(END) Dow Jones Newswires

November 03, 2017 08:17 ET (12:17 GMT)