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AP / JOE BEL BRUNO, AP Bu · Guest

NEW YORK (AP) -- Treasury prices tumbled Friday after the
government's payroll report came in better than expected, raising
speculation that the Federal Reserve will stop lowering interest
rates.
The central bank has slashed rates by 3.25 percentage points
since last September, with the most recent reduction a quarter-point
cut on Wednesday. A growing number of economists believe the Fed's
rate-cutting campaign might be nearing an end, and the latest
government report only lent credence to that theory.
The Labor Department said the nation's employers cut far
fewer jobs than expected last month, stirring optimism about the
health of the economy. And, if the central bank leaves rates
unchanged at future meetings, that could help revive the sagging
dollar and combat inflation.
This would make government debt, which is considered a safe
investment during times of uncertainty, less attractive. Investors
sent stocks sharply higher after the report, although they collected
profits toward the end of the session.
"We had a crescendo of panic that reached its peak in the
middle of March, right around the time of the Bear Stearns
takeover," said Jay Mueller, an economist at Strong Capital
Management. "Since then the fear in the market has ebbed and the
Treasury market has sold off."
However, Mueller advised against counting out a rebound in
Treasury prices as Wall Street digests more earnings and economic
reports. "I feel we'll get more bad news during the quarter and that
will make Treasurys look more attractive," he said.
The benchmark 10-year Treasury note fell 19/32 to 97 7/32
and yielded 3.84 percent, up from 3.77 percent late Thursday,
according to BGCantor Market Data. Prices and yields move in
opposite directions.
The 30-year long bond fell 28/32 to 97 4/32 and yielded 4.55
percent, up from 4.49 percent late Thursday.
The 2-year note, the most sensitive to interest rate cuts
because of its short duration, fell 4/32 to 99 13/32 and yielded
2.44 percent, up from 2.36 percent late Thursday.
In late trading, Treasury prices declined further, pushing
yields higher. As of 5:00 p.m. EDT, the 10-year yield was at 3.86
percent, the 30-year yield was at 4.58 percent, and the 2-year yield
was at 2.47 percent.
The 3-month Treasury bill yielded 1.51 percent, up from 1.40
percent late Thursday, and the discount rate was at 1.21 percent,
down from 1.38 percent.
The fact that employers cut 20,000 jobs in April was a
relief to Wall Street, which had been expecting payrolls to decrease
by 75,000 jobs. This marked the fourth straight month of job losses,
but the data signaled that perhaps the economy might be resisting
falling into recession.
Meanwhile, the Fed said Friday it will work with European
central banks to expand a series of efforts to deal with the global
credit crisis. The central bank will boost the amount of emergency
reserves it supplies to U.S. banks to $150 billion in May, up from
the $100 billion it supplied in April.