Treasury yields rise on nonfarm payrolls report



U.S. Treasury yields gained on Friday after a stronger-than-expected September jobs growth that followed a dip in August.

Yields on benchmark 10-year bonds—used to calculate mortgage rates and other consumer loans—were at 2.45 percent, slightly higher than Thursday's close of 2.44 percent.

The official jobs report showed that 248,000 jobs were created last month, with unemployment down 5.9 percent, below estimates of 6.1 percent.

September's figures were encouraging after August's poor 142,000 reading, revised up to 180,000.

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"However, the Fed has a problem on their hands as the 5.9 percent unemployment rate is at their year end 2014 target and their thesis of a lot of slack in the labor market should be thrown out the window as the participation rate ticks down again," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note. "The labor market is getting tighter, wage increases will eventually follow [labor shortages are being reported] and zero interest rates are wholly inappropriate and actually dangerous at this point in the recovery."

The Federal Reserve is expected to announce the final round of quantitative easing tapering at its October meeting. The move could postpone interest rate hikes, which are currently expected in mid-2015.

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Also of interest on Friday is the service sector ISM for September at 10 a.m., where possible declines in business activity and new orders components could push the headline index lower. In addition, August's trade report is out.

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On Thursday, Treasurys unwound some of the "safe-haven" flows seen earlier in the day to close lower, echoing intraday moves in equities.