U.S. Treasuries Extend Losses after Jobs Report

U.S. government debt prices fell Friday after government data showed resilience in the U.S. jobs market, scaling back expectations of an aggressive interest rate cut by the Federal Reserve next week.

Traders had placed bullish Treasury bets on the view there could be a severe employment downturn due to the housing slump and credit turmoil, but the latest labor data suggested that job growth, while indeed slowing, is not weak enough to push the economy into a recession.

"The payrolls number was as good as we could have asked for," said Carley Garner, senior analyst at Alaron Trading in Las Vegas. "It seemed like to me most of it was already priced in. Apparently there were some people out there who didn't think that was the case."

After private-sector jobs data earlier this week suggested that the government's employment report could be stronger than expected, the Labor Department said non-farm jobs grew by 94,000 in November, versus a median forecast of a 90,000 increase. Last month's payroll figure was weaker than an upwardly revised 170,000 gain in October.

Other unexpectedly strong aspects of the government jobs survey including a jobless rate holding steady at 4.7 percent and a robust 0.5 percent jump in hourly earnings.

Two-year Treasury debt was 2/32 lower in price to yield 3.05 percent, up 1.5 basis points from late Thursday.

Benchmark 10-year notes were down 10/32 in price for a 4.05 percent, their highest in nearly two weeks and up 3 basis points from late Thursday.