The municipal market was mixed Friday and Treasuries fell in the aftermath of the release of recessionary January employment data.
"We're pretty sideways," a trader in New York said. "There's a decent amount of activity out there for a Friday, but it's pretty mixed. We're off a bit on the long end, but on the short end we're actually better a basis point or two. And the intermediate range is pretty flat. So it's about as mixed as a day can get."
"It's really a pretty mixed day overall," a trader in Los Angeles said. "The market is up and down a bit, but I wouldn't call it anything other than mixed."
The Treasury market showed some losses Friday. The yield on the benchmark 10-year Treasury note, which opened at 2.91%, was quoted near the end of the session at 2.98%. The yield on the two-year note was quoted near the end of the session at 1.00% after opening at 0.96%. The yield on the 30-year bond, which opened at 3.65%, was quoted near the end of the session at 3.69%.
In economic data released Friday, non-farm payrolls slumped by 598,000 in January after a revised 577,000 drop the previous month. Economists polled by Thomson Reuters had predicted that 524,000 jobs were lost in January.
The unemployment rate climbed to 7.6% in January after a 7.2% level the previous month. Economists polled by Thomson Reuters had predicted a 7.5% unemployment rate.
Tony Crescenzi, chief executive officer of Miller Tabak Asset Management, wrote in a report that Friday's data is "unlikely to alter recent trends in financial markets, which has been highlighted by range trading in equities, tightening credit spreads, and a stable money market."
"It is important to remember that these trends have developed amid a substantial increase in monthly job losses," he wrote. "Attention is best spent on the upcoming fiscal stimulus package and the bank stabilization plan. Details of the employment report add little color to the headline data except to put an exclamation point on the headlines."
"As bad as the job numbers have been, they would have been even worse if the weakening of consumer spending had been concentrated more heavily in the service sector," Crescenzi added.
Activity in the new-issue market was light Friday.
A slate of economic data will be released next week. Tomorrow, December wholesale inventories and December wholesale sales will be released, followed Thursday by initial jobless claims for the week ended Feb. 7 and continuing jobless claims for the week ended Jan. 31, along with January retail sales and December business inventories. On Friday, the preliminary University of Michigan consumer sentiment index will be released.
Economists polled by Thomson Reuters include a 0.7% drop in wholesale inventories, a 3.5% drop in wholesale sales, 610,000 initial jobless claims, 4.800 million continuing jobless claims, an 0.8% dip in retail sales, a 0.5% drop in retail sales excluding autos, an 0.8% decline in business inventories, and a 61.0 Michigan sentiment reading.
