U.S. Treasury bonds rose on Friday, after a key reading on the U.S. jobs market came in slightly weaker than expected.
The March U.S. non-farm payrolls showed 192,000 jobs were added in March in major test of the argument that the economic weakness of January and February was due to bad weather and the recovery of the world's biggest economy was still on track.
Median forecasts had been for a rise of 200,000 in payrolls, though dealers in the run up to the numbers had been speculating about a number nearer 220,000.
"The markets were disappointed," said Dimitri Delis, a fixed-income strategist at BMO Capital Markets in Chicago.
"Fed hikes might take a lot longer than we had originally expected. The data should be a little bit stronger than what we're getting," he said.
Benchmark 10-year Treasury notes—used to calculate mortgage rates and other consumer loans—rose 21/32 in price, bringing the yield to 2.72 percent, from 2.79 percent at Thursday's close. The 30-year Treasury bond gained 27/32 in price to yield 3.59 percent.
While the data eased fears of an imminent Fed rate hike, it should allow the central bank to continue scaling back its monthly bond-buying stimulus, traders said. Yellen has argued that the Fed needs to maintain a highly accommodative monetary policy for some time to eliminate slack in the labor market.
The employment report offered further evidence of resilience in the U.S. economy after a brutally cold winter took a toll earlier. The Labor Department revised up the pace of hiring for January and February to show 37,000 more jobs were created than previously reported.
"We're coming out of the winter doldrums, there's no question," said Joseph LaVorgna, chief U.S. economist at Deutsche Bank in New York.
Next week, traders will be watching the minutes from the Fed's March policy meeting, to be released on Wednesday, for more clues into the central bank's thinking.
The Fed's transition to a more qualitative assessment of the U.S. economy, in addition to quantitative targets, will be a highlight of the minutes, said Dana Peterson, economist at Citigroup in New York.
The Fed has said it expects not to raise benchmark rates until well after the unemployment rate falls below 6.5 percent, especially if inflation remains below target.