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Rates jump as jobs report shows signs of creeping inflation

Key Points
  • The U.S. lost 33,000 jobs in September, versus a 90,000 jobs increase expected by Reuters.
  • Even with the surprise jobs number, the closely watched hourly wages figure jumped higher, suggesting a long-anticipated revival of inflation.
  • At least four members of the Federal Reserve are expected to offer remarks Friday at a number of different events and conferences across the country.

U.S. government debt yields rose Friday, as investors received their first sign that inflation may be on the rise in the latest jobs report.

The yield on the benchmark 10-year Treasury note was higher, at 2.4 percent at 9:57 a.m. ET, while the yield on the 30-year Treasury bond was up at 2.932 percent. Bond yields move inversely to prices.

Before the jobs report, the 10-year Treasury note yield touched 2.373 percent, its highest level since July 11 when it yielded as high as 2.395 percent. Following the release, the 10-year yield hit a new high of 2.393 percent, still its highest level since July.

U.S. Markets Overview: Treasurys chart

The U.S. economy lost 33,000 jobs in September even as the unemployment rate fell to 4.2 percent, the Bureau of Labor Statistics reported Friday.

It was the first time since September 2010 that the closely watched number was negative.

Even with the surprise jobs number, the closely watched hourly wages figure jumped higher 2.9 percent, suggesting a long-anticipated revival of inflation.

"A big numbers was the increase in average hourly earnings," said Kathy Jones, Chief Fixed Income Strategist, Schwab Center for Financial Research.

She added that the civilian participation in the labor force also proved healthy at 63.1 percent. "The labor force participation rate hasn't been that high since 2014. It's a very good number and has to made the Fed very happy."

US 10-year Treasury note yield intraday

Source: FactSet

"Our rates thesis is playing out," wrote Larry McDonald, head of the U.S. macro strategies at ACG Analytics. "Average hourly earnings [are] far more important than jobs. Average hourly earnings +0.50 percent versus +0.30 percent expected, finally seeing wage pressure."

Sticking with data, wholesale trade will come out at 10 a.m. ET while consumer credit will be released at 3 p.m. ET.

News out of the U.S. central bank is expected to keep dominating discussion, as more officials from the U.S. central bank head to key events to deliver remarks.

Atlanta Fed President Raphael Bostic and Dallas Fed President Robert Kaplan will be the latest individuals to speak in Austin at the Investing in America's Workforce Capstone conference Friday.

Elsewhere, New York Fed President William Dudley will likely be weighing-in on the importance of higher education for economic mobility at the 56th Annual Financial Literacy & Economic Education Conference, which is set to take place in New York.

In Missouri, St. Louis Fed President James Bullard will be at the Bi-State Development 2017 Annual Luncheon Meeting in St. Louis.

Last but not least, on Saturday Boston Fed President Eric Rosengren will be speaking at the 84th International Atlantic Economic Conference in Montreal, where he is set to give the William S. Vickrey distinguished address.

On the commodities front, oil prices came under pressure during early trade, with traders showing signs of concern as another tropical storm appeared to be making its way towards the Gulf of Mexico.

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