The economy created 57,000 new jobs in September, well above median estimates of a 20,000 decline, and combined with an upward revision in August suggested that the economy was gaining traction. The unemployment rate dipped to 6.1% and average hourly earnings fell 0.1%.
The much-feared benchmark revision estimates for March, 2003, came in much more benign at -145,000 than the +600,000 that had been rumored, but the market still rolled over on unwinding of leveraged long positions.
The benchmark 10-year yield vaulted over 30 basis points to 4.21% in the past two sessions, after hedge funds failed to trigger a mortgage-related duration buying spree earlier in the week.
The December bond closed down nearly 2-1/2 points at 108-27, discouraged by no profit-taking rebound into the close at all. The yield curve flattened, with the spread between 2-year notes and 30-year bonds one bp narrower at +346 bp. The dollar and stocks rebounded, while gold slumped nearly 5%.