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(Bloomberg) — The most dangerous time for the Treasury market this month will be when the U.S. issues its employment report Friday, if February and March are any guide.Benchmark 10-year yields jumped 14 basis points on Feb. 6 and 13 basis points on March 6, the dates of the two previous jobs figures. With yields moving inversely to prices, those dates mark the steepest declines in the world’s biggest bond market during the past eight weeks. There’s a strong possibility of another selloff before traders head home in the shortened Good Friday session, according to Hideaki Kuriki, an investor at Sumitomo Mitsui Trust Asset Management in Tokyo. The good news for bond bulls is that the jobs-driven routs don’t always last, he said.
“It’s a short-term reaction,” said Kuriki, one of the portfolio managers for the equivalent of $40.6 billion. “The jobs market is recovering but the inflation rate is still at a low level. Yields will stay low.”The benchmark U.S. 10-year yield was little changed at 1.87 percent at 10:08 a.m. in Tokyo, according to Bloomberg Bond Trader data. The price of the 2 percent note due in February 2025 was 101 5/32. While employment has been the bright spot in the U.S. economy, inflation is slowing, helping push yields down a quarter percentage point in the first quarter.

Above Average

U.S. employers added 245,000 jobs in March, according to a Bloomberg survey of economists before the report due at 8:30 a.m. Friday in Washington. The average for the past two years is 233,320. Hourly earnings climbed at an annual rate of 2 percent, matching February’s figure, based on the responses. Treasuries rose Wednesday as an industry report showed companies in the U.S. added fewer workers in March than economists projected. Bond trading is scheduled to close Friday in Japan and the U.K. in observance of the holiday, according to the Securities Industry and Financial Markets Association. In the U.S., government securities will trade until noon in New York. Treasuries will also close at 3 p.m. in Japan April 6 and stay shut in the U.K. for Easter Monday, before trading as usual in the U.S.

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editors responsible for this story: Garfield Reynolds at greynolds1@bloomberg.net Nicholas Reynolds, Naoto Hosoda