Treasurys gain on payrolls; Fed action seen as more likely (yields at record lows)

[Roland99]

Source: MarketWatch

Treasury prices rose Friday, pushing yields on 2-year notes to a record low, after a weak report on the labor market raised expectations that the Federal Reserve may take steps next week toward using monetary policy to support the faltering U.S. economy.

"We have markets increasingly pricing in some change in the Fed's language next week," said Max Bublitz, chief strategist at SCM Advisors, which oversees more than $3 billion in fixed-income assets. "It wouldn't surprise me to have another probe below these yield levels" in the next few months.

Yields on 10-year notes, which move inversely to prices, fell 8 basis points to 2.83%. They dropped as low as 2.82%, a 16-month low. A basis point is 0.01%.

Yields on 2-year notes fell 3 basis points to 0.50%. They earlier touched 0.49% -- the lowest level on record.

Read more: http://www.marketwatch.com/story/treasurys-up-after-payrolls-fed-action-foreseen-2010-08-06