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Rates are jumping as jobs report showed hidden signs of inflation

The bonds market is closed Monday due to the Columbus Day holiday. Please see below for Friday's story.

U.S. government debt yields jumped Friday after metrics in the latest Labor Department jobs report showed budding signs of inflation.

The closely watched average hourly wages figure rose by an annualized 2.9 percent, a faster pace than the Federal Reserve's 2 percent target for inflation.

Following the report, the 2-year Treasury note yield hit a high of 1.52 percent, its highest since 2008. The 2-year note yield is currently trading at 1.508 percent.

The 10-year yield also hit a high of 2.393 percent after the release, its highest level in nearly three months, before losing some ground at 2.364 percent.

The yield on the 30-year Treasury bond was up slightly at 2.9 percent at 11:57 a.m. ET. Bond yields move inversely to prices.

US 10-year Treasury note yield intraday

Source: FactSet

"For the first time in potentially a decade we're actually looking at real wage pressure. The slack in the labor force is finally dissipating," said Larry McDonald, editor of The Bear Traps Report. "Young people were just not working, but now they're finally coming back. That's what going to shock the Fed."

US 2-year Treasury note yield intraday

Source: FactSet

The jobs report showed that average hourly earnings were up by 12 cents on the month to $26.55, equating to that 2.9 percent gain for the year. The Fed believes healthy inflation growth is about 2 percent.

CNBC's Gina Francolla contributed to this report.