Interest rates fell in the bond market Friday as investors remained focused on debt problems at several weak European governments.
Mixed news from the U.S. on monthly employment also led investors to cut back on risky investments in favor of Treasurys and other safe harbor assets like the dollar.
Bond prices rose, sending their yields lower, as the Dow Jones industrial average fell more than 130 points. Other major stock indexes fell about 1 percent.
The Labor Department reported the unemployment rate unexpectedly fell in January to 9.7 percent from 10 percent, even though analysts expected an uptick. At the same time, however, employers cut 20,000 jobs, more than the 5,000 economists expected, according to Thomson Reuters. The two numbers are calculated from different surveys.
U.S. trading was affected by European stock markets again, which tumbled on concerns about how well Greece, Spain and Portugal will be able to service their mounting loads of debt. In Portugal, opposition parties defeated a government austerity plan Friday and passed its own bill that lets the country's autonomous regions rack up even more debt.
The yield on the 10-year Treasury note that matures in November 2019 fell to 3.55 percent from 3.61 percent late Thursday. Its price jumped 15/32 to 98 17/32. That yield is a widely used benchmark for consumer loans including mortgages.
Josh Stiles, a bond strategist at IDEAGlobal.com, said Treasurys will get tested next week as auctions of three-year and 10-year notes and 30-year bonds take place.
"It's a measure for what the latest risk appetite is following all the fears of the sovereign debt problems in Europe," Stiles said.
The yield on the two-year note maturing in January 2012 fell to 0.74 percent from 0.81 percent. Its price rose 4/32 to 100 8/32.
The yield of the 30-year bond that matures in November 2039 fell to 4.50 percent from 4.55 percent, while its price rose 29/32 to 97 31/32.
The yield on the three-month T-bill that matures May 6 rose to 0.09 percent from 0.08 percent.
The cost of borrowing between banks fell fractionally. The British Bankers' Association said the rate on the three-month loans in dollars — the London Interbank Offered Rate, or Libor — rose to 0.24969 percent from 0.24875 percent.
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