The market was surprised Friday by the advance report on fourth-quarter growth, which showed the US economy grew at a 5.7 percent rate, the fastest quarterly increase in six years. As the economy rebounds from the worst recession since the 1930s, that boosts hopes for jobs growth in the coming unemployment report.
Analysts polled by Reuters expect nonfarm payrolls to rise by 5,000 in January after US employers unexpectedly cut 85,000 jobs in December. The household unemployment rate is expected to remain steady at 10 percent. Growing scepticism over the sustainability of the US recovery, together with a spurt of month-end portfolio rebalancing, boosted Treasuries on Friday. Benchmark 10-year notes posted their biggest monthly decline in yield since March 2009.
Analysts polled by Reuters forecast a rise in the index to 55.2 from December's 54.9, which would be the sixth consecutive month of expansion. Wednesday will bring the ISM's survey on the services sector, which is expected to come in at a reading of 51. A level greater than 50 reflects expansion. The government easily sold $118 billion in notes this past week. The size of the upcoming refunding is expected to exceed November's record of $81 billion. "I think you're going to see those new records set through out 2010," Bemis said.