TREASURIES-Prices slump on data shows hiring surge in February
* 10-year yields at highest since April
* 236,000 jobs added to nonfarm payrolls last month
* Unemployment rate falls to a four year-low
NEW YORK, March 8 (Reuters) - Prices for U.S. Treasuries sank on Friday after data showed U.S. payrolls surged in February, pushing the unemployment rate to a four-year low. Nonfarm payrolls jumped by 236,000 jobs last month, the Labor Department said on Friday, handily beating economists' expectations for a gain of 160,000. "There's a lot to like in this report," said Terry Sheehan, an economic analyst with Stone & McCarthy Research Associates in Princeton, New Jersey. "The main trends are all moving in the right direction." Prices for benchmark 10-year notes dropped 23/32 after the data to yield 2.075 percent, compared with 1.9965 percent late on Thursday. The note hit its highest yield since April on Friday. The 30-year bond fell 1-11/32 to yield 3.272 percent, compared with 3.2016 late on Thursday. "The near-term market reaction will be to sell the back end of the yield curve," with equities and the dollar rallying, said Rob Carnell of ING Bank. "With the Fed committed to keeping rates on hold for the foreseeable future, the front end of the yield curve is locked down, leaving all pressure on Treasuries to come in the back end of the curve. Steepening for now seems probable." After release of the report, traders of short-term U.S. interest rates brought forward their expectations for the timing of the Federal Reserve's first rate hike into late 2014.
Yields pushed steadily higher this week as early data pointed to a bigger rise in payrolls than previously expected and thus a swifter healing of the labor market. Nonetheless, the nonfarm payrolls data surprised, beating even revised expectations.
But the unemployment rate, while falling to 7.7 percent from 7.9 percent, remains far above the 6.5 percent the Federal Reserve wants to see, which means policy is likely to stay ultra loose for at least months to come. Analysts said the Fed is looking for steady improvement over a longer term, as well. "This was a strong number and one of those rare cases where we were firing on all cylinders," said Jacob Oubina, senior U.S. economist with RBC Capital Markets in New York. "Having said that, this will likely not mean much for Fed policy, as they will need to see more than one month of strong numbers and if it is sustained." That means continued asset-buying by the U.S. central bank. The Fed has been buying $85 billion per month of mortgage-backed securities and Treasuries through the year.