U.S. Government bonds slump on stronger labour market data; Fed policymakers’ speeches in focus

The U.S. Treasuries were pushed lower across the curve on Monday as November employment report come in around market expectations with respect to non-farm payrolls, coupled with a push lower in the headline unemployment rate to 4.6 percent.

The yield on the benchmark 10-year Treasury note rose 3 basis points to 2.42 percent, the yield on long-term 30-year Treasury climbed 3 basis points to 3.09 percent and the yield on short-term 2-year note bounced 2 basis points to 1.12 percent by 12:00 GMT.

The November US Labour Department employment situation report revealed a stronger +178k increase in non-farm payrolls, versus the revised +142k result that occurred in October (previous was +161k), in line with market expectations for a +180k increase.

This comes alongside a considerable further decrease in the unemployment rate to 4.6 percent (down from 4.9 percent), nine-year low, well below expectations for a 4.9 percent result. Meanwhile, average hourly earnings decreased -0.1 percent m/m, versus the unrevised +0.4 percent m/m reading seen in October. On balance, we see this result as providing more than enough weight to support the Fed raising rates at the December FOMC meeting.

Moreover, crude oil prices climbed on fresh buying ahead of OPEC and non-OPEC meeting on Saturday. The International benchmark Brent futures rose 0.73 percent to $54.86 (to the highest since July last year)and West Texas Intermediate (WTI) jumped 0.72 percent to $52.05.

Markets now look ahead to a lighter flow of data next week, highlighted by ISM non-manufacturing, trade balance and University of Michigan consumer sentiment releases, coupled with commentary early in the week by Fed Presidents Dudley (New York), Evans (Chicago) and Bullard (St. Louis) which will likely continue driving home expectations for a mid-December move.

Meanwhile, the S&P 500 Futures traded 10 points higher to 2,202 by 12:20 GMT. While at 12:00 GMT, the FxWirePro's Hourly Dollar Strength Index stood neutral at -44.57 (lower than -75 represents bearish trend).