Bonds: Gilts find bid but US jobs weakness may be overstated

These were the movements in some of the most widely-followed 10-year sovereign bond yields:

US: 2.16% (-5bp)

UK: 1.04% (-4bp)
Germany: 0.27% (-3bp)
France: 0.71% (-3bp)
Italy: 2.26% (+1bp)
Spain: 1.57% (+1bp)
Portugal: 3.04% (+4bp)
Greece: 6.07% (-3bp)
Japan: 0.06% (+1bp)

Longer-term Gilts found a good bid following the release of a considerably weaker-than-expected reading on the US job markets which pushed their yields lower.

Yields on bonds move in the inverse direction to their price.

However, economists remained sanguine with some pointing to various seasonal quirks which might be responsible for the lower-than-expected readings on non-farm payrolls and labour force growth.

US non-farm payrolls expanded by 138,000 last month, well below the 185,000 economists had penciled and alongside large downwards revisions to data for prior month.

The labour force participation rate meanwhile fell by 0.2 percentage points to 62.7% while average hourly earnings advanced at a 2.5% clip year-on-year, less than 2.7% gain expected.

Initially, while commenting on whether the soft jobs report for May was indicative of recession risks, economists at Barclays said they would take further slowing in employment growth as "a negative signal".

However, in a follow-up research note sent to clients they concluded there was enough evidence in the jobs data to conclude that calendar day effects impacted on the Bureau of Labor Statistics's estimates of job growth and labour force participation.

"When the survey week for the May employment report – the week that includes the 12th of the month – falls in the first half of the month, seasonally adjusted employment growth tends to be suppressed, as does labor force growth, since fewer numbers of college-age workers are captured," the investment bank said.