Bonds

Treasury yields climb after U.S. economy adds more than 1.7 million jobs in July

U.S. government debt yields rose Friday after the government said the U.S. economy added more than 1.7 million jobs in July, more than expected and pushing the unemployment rate back toward single digits.

The yield on the benchmark 10-year Treasury note rose to 0.549% and the yield on the 30-year Treasury bond climbed to 1.214%. Yields move inversely to prices.

U.S. yields, which had drifted lower prior to the Labor Department's monthly jobs report, moved higher after the government said the total nonfarm payroll increased by 1.763 million for the month. The unemployment rate fell to 10.2%, also better than the estimates from economists surveyed by Dow Jones.

The consensus was for growth of 1.4 million and an unemployment rate of 10.6%. 

Treasurys

Average hourly earnings, sometimes watched by fixed-income investors for early signs of inflation, beat expectations for a loss and actually increased by 7 cents in July from June. 

"The economy is proving more resilient than many people thought – the jump in payrolls of 1.76mm (and higher than the 1.48mm expected) is showing more strength in the job market, which should be good news for equities and other risk assets," wrote Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.

"Much of the rally that we've seen so far has been fueled by Federal government stimulus and Federal Reserve liquidity, but for it to continue, the economy needs to continue to heal and the data this morning is adding credence to the idea that things are continuing to improve," he added.

Meanwhile, Congressional Democrats and White House representatives have yet to make substantial progress on a new coronavirus aid bill. Both sides have expressed a desire to persist with negotiations, but President Donald Trump has threatened to pull out of talks if a deal is not reached by the end of Friday.

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