Treasury yields pull back as investors looked beyond hotter-than-anticipated job report

Treasury yields pulled back from an earlier pop on Friday as investors looked beyond stronger-than-expected labor data.

The yield on the 10-year Treasury pulled back by about 3 basis points to 3.488%. At its highest level, the yield was 3.638%.

The 2-year Treasury yield gained just over 2 basis points to 4.282%. Following the new data, it soared as high as 4.41% earlier in the day.

Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.


Nonfarm payrolls increased 263,000 for the month while the unemployment rate was 3.7%, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for an increase of 200,000 on the payrolls number and 3.7% for the jobless rate.

In another blow to the Fed's anti-inflation efforts, average hourly earnings jumped 0.6% for the month, double the Dow Jones estimate. Wages were up 5.1% on a year-over-year basis, also well above the 4.6% expectation.

But yields pulled back later in the day in tandem by stocks paring losses as market observers say traders shook off Friday's data and looked instead to the upcoming Fed meeting. Investing professionals say the late slide was also driven by traders holding hope on Chair Jerome Powell's Wednesday comments that a cooling of interest rates was likely and could come as early as December.

The central bank has been trying to control inflation through interest rate hikes and has raised rates by 75 basis points at each of its last four meetings.

Fed officials have been indicating that the pace of rate hikes could slow down soon, and markets are now expecting the central bank to implement a 50 basis point rate hike at its December meeting.