September 1, 2017 / 6:47 PM / a year ago

UPDATE 1-U.S. TIPS breakeven rates rise as traders brush off job data

(Updates market action, adds quote)

NEW YORK, Sept 1 (Reuters) - The U.S. bond market’s gauges of inflation expectations rose on Friday following a brief drop, as traders shrugged off a set of weaker-than-forecast data on domestic job and wage growth in August.

U.S. employers hired 156,000 workers last month, fewer than the 180,000 forecast by economists polled by Reuters, while the jobless rate ticked up to 4.4 percent from 4.3 percent in July, the Labor Department said on Friday.

Wage growth slowed to 0.1 percent from 0.3 percent in the previous month, reviving concerns that there is not enough pressure to push inflation toward the Federal Reserve’s 2 percent goal in the foreseeable future, analysts said.

The bond market gained slightly shortly after the payrolls report. Those gains soon faded as analysts downplayed the data miss on seasonal factors seen in August in recent years.

“Many economists have dismissed the latest report due to the quixotic seasonal adjustments in the month of August. This (August) was no exception,” said John Vail, chief global strategist at Nikko Asset Management in New York.

Bond prices turned weaker following a report from the Institute for Supply Management that showed U.S. factory growth accelerated in August to its strongest level since 2011.

Improvement in manufacturing activity bolstered investors’ inflation outlook, Tradeweb data showed.

At 2:06 p.m. EDT (1806 GMT), the 10-year inflation breakeven rate, or the yield difference between 10-year Treasury Inflation Protected Securities and regular 10-year Treasury notes, was 1.79 percent, up 2 basis points from late on Thursday and 3 basis points from a week earlier, Tradeweb data showed.

Reporting by Richard Leong; Editing by Chizu Nomiyama and Paul Simao

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