Treasuries Give Back Ground After Early Surge But Remain Firmly Positive

Treasuries stumbled slightly after an initial rally, but still managed to continue the upward trend witnessed over the last two sessions.

Despite some fluctuations in the afternoon, bond prices generally held firm in the green territory. Consequently, the yield on the primary ten-year note, inversely proportional to its price, fell by 7.1 basis points to 4.50 percent.

The brisk early success of treasuries pushed the ten-year yield below the 4.50 percent mark, a first in three weeks. This momentum was primarily due to a key report from the U.S. Labor Department, which revealed that the country's employment rate increased less than projected in April.

According to the department, non-farm payroll employment rose by 175,000 in April, compared to an upwardly revised count of 315,000 in March. This increment fell short of economists' predicted jump of 243,000 jobs, much lower than the 303,000 jobs initially reported for the previous month.

The same report showed a slight increase in the unemployment rate to 3.9 percent in April, up from 3.8 percent in March, contrary to expectations of it remaining steady.

Moreover, the annual wage growth rate decelerated to 4.0 percent in April, from 4.1 percent in March, aligning with economists' forecasts.

This data sparked positive sentiments regarding the prospects of interest rates in light of the Federal Reserve's recent monetary policy meeting. Larry Tentarelli, Chief Technical Strategist at Blue Chip Daily Trend Report, stated that the latest payroll report is a net positive, as it indicated a slight cool-down in the labor market, hinting at potential Fed rate cuts.

Tentarelli further noted that barring an inflationary breakout and assuming moderate jobs data, the first rate cut could occur as soon as September, but emphasized the Fed's heavy reliance on incoming data for policy decisions.

However, purchase interest dwindled throughout the morning as trade participants responded to a report from the Institute for Supply Management on service sector activity in April. Despite revealing an unexpected slump in the service sector for the month, the report indicated a significant uptick in price growth.

Moving into the next week, the U.S. economic calendar seems relatively subdued following several major events recently, although a preliminary report on consumer sentiment for May could draw attention later in the week.