Bonds

10-year Treasury yield jumps to 0.7% after unemployment rate drops

Treasury yield jumped higher on Friday after August jobs data came in stronger than expected.

The yield on the benchmark 10-year Treasury note climbed 8 basis points to hit a high of 0.70%, while the yield on the 30-year Treasury bond also gained 8 basis points to 1.42%. Yields move inversely to prices.

The U.S. economy added 1.37 million jobs in August, according to Labor Department figures released Friday. The number was ahead of the 1.32 million expected by economists polled by Dow Jones.

The unemployment rate also fell to 8.4% from 10.2% in July, by far the lowest since the coronavirus shutdown in March. The consensus estimate was for the jobless rate to decline to 9.8%.

"It's a strong growth reaction. Higher yields, steeper curve," said John Briggs of NatWest. "I think a lot of it is the unemployment side of it. If you're tightening the labor market that quickly, it should have a negative reaction in the bond market."

Government hiring helped boost the total, with the growth of 344,000 workers accounting for a quarter of the monthly gain. Most of that hiring came from Census workers, whose rolls increased by 328,000.

"The Unemployment Rate was the big surprise, dropping to 8.4% from 10.2% and well below the 9.8% consensus -- this despite a 0.3% increase in the participation rate to 61.7%," Ian Lyngen, BMO's head of U.S. rates, said in a note.

Yields fell in the previous session amid a broad flight to safety as equities sold off. Stocks dived sharply on Thursday, retreating from their all-time highs, as the technology sector suffered its biggest drop in months. The Dow Jones Industrial Average tumbled more than 1,000 points at its session low. 

There are no Treasury auctions scheduled for Friday.

— CNBC's Patti Domm and Ryan Browne contributed reporting.