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US Treasury yields climb after better-than-expected jobs report

Treasury yields jumped on Friday as investors sold bonds on the stronger-than-expected jobs report.

The yield on the benchmark 10-year Treasury notes climbed to 2.266 while the yield on the 30-year Treasury bond was higher at 2.844 percent. Bond yields move inversely to prices.

Symbol
Yield
 
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%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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The U.S. economy added 209,000 jobs last month versus Reuters expectations of 183,000.

"It was a certainly a very strong number all around led by the headline number and solid if not spectacular payroll growth," said Eric Stein, co-director of global income at Eaton Vance, in an email. "This number very much keeps the Fed on track for a Sept announcement of balance sheet reduction and I still think a December rate increase."

The unemployment rate ticked lower to 4.3 percent, the lowest level since March 2001. A more encompassing rate that includes discouraged workers and the underemployed was unchanged at 8.6 percent.

The closely watched wage number was unchanged from previous months, with average hourly earnings up 2.5 percent on an annualized basis.

The strong jobs numbers are likely to encourage the Federal Reserve to further tighten monetary policy. But investors are still skeptical about how much more the Fed can tighten given muted inflation data and stagnant wage growth.

Market expectations for a rate hike in December are about 50 percent, according to the CME Group's FedWatch tool.

"We got our number over 200,000. That part's good," said Jack Albin, CIO at BMO Private Bank. "The wage number 2.5 (percent) is respectable. It just fits into the slow and steady ... This does not give the Federal Reserve a clue one way or the other. It fits exactly into the trend," he added.

Bond yields have been trending lower in recent months. The 10-year Treasury note yield traded around 2.62 percent in March. Former Fed Chair Alan Greenspan warned that the market's strong status quo will not last, alluding to an upcoming jump in rates.

"If you go back to the time of Alexander Hamilton, long-term interest rates, government bond interest rates have never been as low as they are today," Greenspan told CNBC's "Squawk Box" Friday morning. "The current level of interest rates is abnormally low, and there's only one direction in which they can go. And when they start, it will be rather rapid."