The iShares Barclays 20+ Year Treasury Bond (TLT) and other ETFs that invest in U.S. Treasuries rose in early trading Friday after the January nonfarm payrolls report came in weaker than expected.
The yield on the 10-year Treasury note dropped from a morning high of 2.02% to as low as 1.92% after the employment report. Bond prices and yields move in opposite directions.
Safe-haven Treasury bond ETFs declined in January as interest rates ticked higher and investors grew more confident on the U.S. economy. TLT lost about 3% for the month.
“A disappointing U.S. jobs report sparked buying in Treasury bonds, helping the market recover some ground from the biggest monthly selloff in 10 months,” Dow Jones Newswires reported.
The U.S. added 157,000 jobs in January, less than expected, as the unemployment rate rose to 7.9%.
The jobs report “deflated speculation that the Federal Reserve may stop buying Treasury bonds before the end of the year. The Fed’s steady buying over the past few years has been a main factor holding bond yields lower,” according to the newswire report. “The question remains whether the bond market’s rebound can last long. Anxiety has grown over the past few weeks that an era of rising yields is poised to begin.” [Great Rotation from Bonds to Stocks?]
iShares Barclays 20+ Year Treasury Bond
Full disclosure: Tom Lydon’s clients own TLT.
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