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Treasury yields mostly higher after jobs report

Key Points
  • "The moderate number keeps the Fed on a moderate path, which is growth positive," said Robert Tipp, chief investment strategist at PGIM Fixed Income.
  • Treasury yields recovered in midday Friday trading after earlier hitting roughly two-week lows on the April employment report.
  • The data showed average hourly earnings rose 2.6 percent from a year ago, a touch softer than the prior month's pace, while the headline figure on job creation missed expectations.

U.S. Treasury yields rose Friday after a weaker-than-expected April employment report eased concerns the Federal Reserve would raise interest rates too quickly.

"The moderate number keeps the Fed on a moderate path, which is growth positive," said Robert Tipp, chief investment strategist at PGIM Fixed Income.

The rate-sensitive traded near 2.5 percent Friday at 4:30 p.m. ET. The yield fell to 2.46 percent, its lowest since April 23, following the morning release of the nonfarm payrolls numbers.

The data showed average hourly earnings also rose 2.6 percent from a year ago, a touch softer than the prior month's pace. Overall, payrolls increased by 164,000 last month, missing the expectation of 192,000. But the unemployment rate fell to an 18-year low of 3.9 percent.

U.S. Markets Overview: Treasurys chart

The benchmark 10-year Treasury note yield also traded higher near 2.95 percent as of 4:30 p.m. ET, after earlier falling to a low of 2.912 percent, its lowest since April 20.

The yield on the 30-year Treasury bond traded near 3.12 percent after briefly declining to 3.089 percent, its lowest since April 19. Bond yields move inversely to prices.

"Stocks are up and the jobs report isn't weak enough to change the Fed's path for rate hikes," said Bryce Doty, senior portfolio manager of fixed income at Sit Investment Associates.

Also on Friday, San Francisco Fed President John Williams, who is is set to become the head of the New York Fed in June, told CNBC's Steve Liesman that he expects inflation could modestly overshoot the central bank's 2 percent target.

"I see the unemployment rate getting down to 3.5 percent," Williams said. "I see us maybe modestly overshooting our 2 percent inflation target, so there may be a time over the next few years where the federal funds rate is slightly above its long-run neutral rate."

The U.S. trade delegation's visit to Beijing ended Friday with little apparent progress in resolving a trade dispute between the two countries.

—CNBC's Patti Domm and Tom Franck contributed to this report.