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Treasuries Fall as Unemployment Rate Unexpectedly Drops to 8.6%

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Dec. 2 (Bloomberg) -- Treasuries fell as the U.S. payrolls report showed employers added jobs and the unemployment rate unexpectedly fell to 8.6, stoking speculation the economy is accelerating.

 

 

U.S. debt extended the first weekly loss in three weeks as employers added 120,000 jobs in November after an increase of 100,000 positions in the previous month, the Labor Department reported today in Washington. The median forecast of 84 economists in a Bloomberg News survey was for the jobless rate to remain at 9 percent. A European proposal to channel central- bank loans through the International Monetary Fund may deliver as much as 200 billion euros ($270 billion) to fight the debt crisis, two people familiar with the negotiations said.

 

“The labor market continues to heal, albeit slowly,” said Gary Pollack, head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York, which manages $12 billion in bonds. “The unemployment rate drop was pretty surprising.”

 

The benchmark 10-year note yield rose three basis points, or 0.03 percentage point, to 2.12 percent at 8:44 a.m. in New York, according to Bloomberg Bond Trader prices. The 2 percent note due November 2021 dropped 6/32, or $1.88 per $1,000 face amount, to 99 1/32.

 

The yield on the 30-year bond was little changed at 3.09 percent.

 

“It’s a step in the right direction,” said Richard Schlanger, who helps invest $20 billion in fixed-income securities as vice president at Pioneer Investments in Boston. “However, Europe is dominating the headlines right now, and we’re going to have to wait and see how that plays out.”

 

Bond Returns

 

Treasuries have returned 8.5 percent in 2011, set for the best annual return since a 14 percent gain in 2008, Bank of America Merrill Lynch index data show. Investors bought the U.S. securities as a haven as Europe’s debt crisis threatened to infect the region’s larger economies.

 

The U.S. 10-year yield traded in a 28-basis-point range during November, with a high of 2.15 percent and a low of 1.87 percent. That compares with a 70-basis-point range the month before, with a high of 2.42 percent and a low of 1.72 percent.

 

The 10-year yield will rise to 2.18 percent by year-end, according to a Bloomberg News survey of financial companies, with the most recent forecasts given the heaviest weightings. The yield will reach 2.30 percent by the end of March 2012, the surveys show.

 

German Chancellor Angela Merkel likened solving the debt crisis to a marathon in a speech today as she rejected joint euro-area bonds and central-bank action while pushing for closer economic ties and tougher budget enforcement.

 

European Discussions

 

Germany is leading a push with France for closer economic ties among euro nations allied to tougher enforcement of budget rules to counter the debt crisis now in its third year. Merkel said she will consult with French President Nicolas Sarkozy on Dec. 5 to coordinate their approach to next week’s summit.

 

This week’s drop in Treasuries was driven by a Fed announcement on Nov. 30 that the premium banks pay to borrow dollars overnight from central banks will decline by a half- percentage point to 50 basis points.

 

Fed officials are debating whether the central bank should resume large-scale purchases of securities to push down an unemployment rate that has been stuck at 9 percent or higher since April.

 

The Fed is scheduled to sell as much as $8.75 billion of Treasuries due in 2013 today as part of a plan announced in September to replace $400 billion of shorter maturities in its holdings with longer-term debt to cap borrowing costs. It also plans to buy as much as $2.75 billion of securities due from 2036 to 2041.

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Because I am a total DOPE with this stuff, do you mind a layman's translation and/or your take...surprising and encouraging? temporary positive blip? something else?

 

 

Thanks

 

 

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Because I am a total DOPE with this stuff, do you mind a layman's translation and/or your take...surprising and encouraging? temporary positive blip? something else?

Thanks

 

it's mixed...

 

While the Rate is an increase there are numbers within the calculation that show we are still deep in the woods:

 

I've been watching the indicators since before the news broke and institutions don't know what to make of it.

 

That is not confident.

 

Zero Hedge outlines some data that average joe isn't told

 

[img=

 

http://www.stripersonline.com/image/id/2527222/width/600/height/348]

 

[img=

 

http://www.stripersonline.com/image/id/2527224/width/600/height/388]

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“It’s good news, not great news,” said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, whose forecast for a 125,000 gain in payrolls matched the median forecast in Bloomberg News survey of economists. “The labor market is gradually healing. I wouldn’t take huge comfort that the unemployment rate is falling but some comfort that it’s edging down.”

 

 

The unemployment rate, derived from a separate survey of households, was forecast to hold at 9 percent. The decrease in the jobless rate reflected a 278,000 gain in employment at the same time 315,000 Americans left the labor force.

“You’d like to see the unemployment rate coming down when people are coming into the job market, not disappearing,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in an interview on “Bloomberg Surveillance” with Tom Keene. “That’s probably exaggerating the trend in unemployment.”

 

Private hiring, which excludes government agencies, rose 140,000 after a revised gain of 117,000. It was projected to rise by 150,000, the Bloomberg survey of economists showed.

 

Factory payrolls increased by 2,000, less than the survey forecast of a 9,000 increase and following a 6,000 gain in the previous month.

 

 

it's luke-warm and clammy data

 

the revisions supplied by the Dep of Labor probably accounted for the "surprise" and no one in the instituional investment world is Buying Bonds as a show of confidence...

 

(EuroUSD is selling off from it's highs as well)

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Employment at service-providers increased 126,000, including a 50,000 gain in retail trade at companies hired for the holiday shopping season. The number of temporary workers increased 22,300.

 

 

this happens every holiday season and that means in January and February those numbers will decline.

 

Construction companies shed 12,000 workers. Government payrolls decreased by 20,000. State and local governments employment dropped by 16,000, while the federal government trimmed 4,000 positions.

 

Average hourly earnings fell 0.1 percent to $23.18, today’s report showed. The average work week for all workers held at 34.3 hours.

 

 

That's not good

 

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 15.6 percent from 16.2 percent.

 

The report also showed an increase in long-term unemployed Americans. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 43 percent from 42.4 percent.

 

The jobless rate has exceeded 8 percent since February 2009, the longest stretch of such levels of unemployment since monthly records began in 1948.

 

Federal Reserve Chairman Ben S. Bernanke and his colleagues last month cut economic growth forecasts for 2012 and said unemployment will average 8.5 percent to 8.7 percent in the final three months of next year, up from a prior range of 7.8 percent to 8.2 percent.

 

Growth in the U.S. and other advanced economies “has been proceeding too slowly to provide jobs for millions of unemployed people,” Fed Vice Chairman Janet Yellen said in a Nov. 29 speech in San Francisco. She called for “urgent” international action to combat a “dearth” of global demand.

 

 

 

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the headline #'s appear great and give the impression we are in a recovery.



 



the market is trading on that.



 



but the reality is the unemployment rate is going down because folks are leaving the labor force (they're giving up).  they're driving the percentage down. 



 



i'd be a little more optimistic if folks were returning to the labor force - that would temporarily drive the unemployment rate UP. 



 



 


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