Interest rates fell sharply in the bond market Friday as a disappointing government report on hiring led investors to buy safe investments.
Heavy demand for Treasurys drove rates lower. The yield on the 10-year note, which is tied to rates on mortgages and other consumer loans, fell to 3.22 percent from 3.37 percent late Thursday.
The price on the note maturing in May 2020 rose $1.3125 to $102.375.
The Labor Department said hiring remains weak, raising worries about the pace of the economic recovery. Private employers hired 41,000 people in May, down 80 percent from 218,000 in April. It was the lowest number since January.
Stocks turned lower on the report, with the Dow Jones industrial average falling more than 200 points in afternoon trading.
The disappointing news on jobs only added to concerns about the U.S. economy and fed demand for Treasurys and other relatively safe investments.
Many investors are also worried about how Europe will manage its heavy debt loads. Comments from Hungary's new government that the country's economy is in dire shape helped send the euro to a new four-year low against the dollar, even though Hungary isn't part of the 16-nation block that uses the shared currency.
The fear is that weakness in smaller European countries could lead to more expensive bailouts, as happened with Greece. European countries and the International Monetary Fund have agreed to a $1 trillion emergency loan package to shore up weak countries, but investors are not yet fully convinced that that will be enough to prevent the crisis in confidence in Eureopean goverment debt from deepening.
Treasury prices had skyrocketed in recent days because of the persistent worries in Europe, sending yields in the 10-year and 30-year bonds to their lowest levels of 2010.
In other trading, the yield on the 30-year Treasury bond maturing in May 2040 fell to 4.15 percent from 4.27 percent. Its price rose $2.15625 to $103.90625.
The yield on the two-year note that matures in May 2012 fell to 0.73 percent from 0.83 percent. The price rose 18.75 cents to $100.03125.
The yield on the three-month Treasury bill maturing on Sept. 2 fell to 0.12 percent from 0.13 percent. 1
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