Bonds rise on job market weakness

[spice756]

NEW YORK (CNNMoney.com) -- Labor market worries boosted Treasury prices Thursday after a spike in weekly unemployment claims.
The benchmark 10-year note rose 19/32 to 103 2/32, while its yield fell to 3.62% from 3.7% late Wednesday. Prices and yields move in opposite directions.

The 30-year bond rose 29/32 to 103 28/32, with its yield falling to 4.27% from 4.32%.

The 2-year note rose 5/32 to 100 12/32. Its yield fell to 2.17% from 2.26%.

Bonds also rose Wednesday after the Federal Reserve said slow U.S. economic activity could continue into next year.

Job weakness: Investors bought Treasurys after the Labor Department said applications for unemployment benefits jumped by 15,000 last week to 444,000. Economists polled by Briefing.com had expected the number of new claims to fall to 420,000.

Economic weakness often prompts investors to shift their money out of the more volatile stock market (http://money.cnn.com/2008/09/04/markets/markets_newyork/index.htm?postversion=2008090418) and corporate bonds into the safety of Treasurys, which are backed by the U.S. government.



What is all this Treasurys they are talking about?




The Dow Jones index fell more than 300 points during Thursday trading after the report's release and news of sluggish retail sales (http://money.cnn.com/2008/09/04/news/companies/same_store_sales/index.htm?postversion=2008090411).

More indications of labor market breakdowns are expected Friday, when the Labor Department releases its monthly jobs report. Economists expect the government to report an eighth straight month of job reductions.
Taming inflation: Bond investors were also paying close attention to signals that inflation was being brought under control. Falling inflation drives up the value of Treasurys.

On the open market, the dollar (http://money.cnn.com/data/currencies/index.html) rose versus the 15-nation euro, following a decline in oil prices and signs of weakness in the European economy.
Oil and the dollar have had an inverse relationship over the past several months as investors bought crude and other commodities to hedge against inflation. But in the past month and a half, oil prices have fallen sharply from an all-time high set in July. Oil prices (http://money.cnn.com/2008/09/03/markets/oil/index.htm?postversion=2008090315) settled down $1.46 a barrel at the end of Thursday trading.

"The consensus view is that inflation has peaked, and that's certainly helped by the falling commodity prices," said Wan-Chong Kung, senior fund manager at First American Funds.

The dollar has also been getting a boost from signs of weakness overseas. European Central Bank president Jean-Claude Trichet expressed concern Thursday about both inflation of the euro and slowing economic growth.
In the United States, signs of higher productivity and lower wages helped quell fears of runaway dollar inflation as well.

The productivity of American workers climbed 4.3% in the second quarter, the Labor Department reported Thursday, much larger than expected. At the same time labor costs fell 0.5%.


http://money.cnn.com/2008/09/04/markets/bondcenter/bonds/?postversion=2008090413


Where do they get that lower wages will stop runaway dollar ?

[spice756]

It is interesting the economy in Canada is doing better than the US.But the economy in the US is slowing down.

What is also interesting is wages are higher in Canada.

[Plagueround]

What is all this Treasurys they are talking about?



http://money.cnn.com/2008/09/04/markets/bondcenter/bonds/?postversion=2008090413


Where do they get that lower wages will stop runaway dollar ?

It's a supply and demand thing. The idea (and I must stress I'm simply explaining the thought process, not endorsing any sort of capitalist policy in the matter) is that the more money people are making the more they'll be able to afford. If they can afford more, there will be less supply to meet the demand, thus, to meet the demand you either increase supply or inflate the cost so less people can afford it. If they inflate the cost, the dollar gets weaker because it has less buying power than it previously did. It likely gets much more complicated than what I've described but that's the general idea.

[spice756]

Well the more money people get the higher the inflation.Say everyone got $1,000 a day than loaf of bread may be $80.

The more money that is being printed the higher the inflation.The more money people get the higher inflation.


People get less money and less inflation or people get more money and higher the inflation.

But really the government needs to pay on theire dept or we are into other great depression.

I think inflation is WAY WAY WAY WAY TOO high now and it most stop.

[spice756]

It's a supply and demand thing. The idea (and I must stress I'm simply explaining the thought process, not endorsing any sort of capitalist policy in the matter) is that the more money people are making the more they'll be able to afford. If they can afford more, there will be less supply to meet the demand, thus, to meet the demand you either increase supply or inflate the cost so less people can afford it. If they inflate the cost, the dollar gets weaker because it has less buying power than it previously did. It likely gets much more complicated than what I've described but that's the general idea.


Ya you are talking about the supply and demand thing.Say I own a shoe company:(:( if the demand is higher than the supply , I make more shoes or the shoes coast more.