10-year yields surge above 2.3% on jobs report

Traders at the CME Group's Chicago Board of Trade
Tim Boyle | Bloomberg | Getty Images

U.S. sovereign bond yields surged Friday after the October jobs report handily beat expectations.

The U.S. economy added 271,000 jobs last month, the Labor Department said, with the unemployment rate falling to 5 percent. Economists polled by Reuters forecast about 180,000 new jobs were added in October, with unemployment holding at September's 5.1 percent rate.

"It's very encouraging to see a solid monthly job gain at the same time better wage growth but perspective is always important. ADP on Wednesday said the average job gains over the past three months for the private sector was 185,000," Peter Boockvar, chief market analyst at The Lindsey Group, said in a note.

"After today's BLS figure of 268k, the government's 3 month average is 181k for the private sector. Thus, the October strong figure is a mean reversion print from the soft numbers seen in August and September," he said.


Benchmark 10-year Treasury yields rose to trade around 2.33 percent on Friday, after closing at 2.245 percent on Thursday. They traded at about 2.23 percent ahead of the report's release.

10-year yield intraday

Source: FactSet

Meanwhile, yields on the 30-year Treasury rose to 3.0929 percent Friday morning after finishing at 3.012 percent Thursday. Yields broke the 3 percent handle for the first time in six weeks earlier in the week. They traded at about 2.99 percent ahead of the report.

In shorter term maturities, yields were also higher. Two-year yields traded around 0.9 percent after hitting 0.958 percent, their highest levels since May 2010.

Read More Nonfarm payrolls: 271K, vs expected 180K

"The obvious is that the Oct payroll data makes a Dec move almost a certainty. With the FOMC bent on delivering their first move before year end, they are less concerned with the details than the optics and the optics of this report are quite strong. To say the details are strong enough to wipe out concerns the economy has shifted to a lower pace of expansion is, however, a bit of an overstatement," Steve Blitz, chief economist at ITG Investment research, said in a note.

Just one other monthly employment report is due before the Federal Reserve meets December 15 and 16.

Other data released Friday includes the latest consumer credit figures for September at 3:00 p.m.

Chicago Fed President Charles Evans spoke with CNBC after the report was released and said string jobs growth will help push inflation to the Fed's 2 percent target.

A "very good" U.S. jobs report for October on top of faster than expected progress over the last year means the U.S. economy is effectively at full employment, St. Louis Fed President James Bullard said in a Reuters report Friday.

Lael Brainard speaks at an IMF conference after the closing bell.