The 10-year Treasury yield moved higher in reaction to January job growth that was more than double what Wall Street economists had expected.
The benchmark yield was up more than 3 basis points at 4.176%, while the 2-year Treasury note yield surged 6 basis points to 3.514%, reflecting reduced expectations for Federal Reserve interest rate reductions the rest of this year. The 30-year Treasury yield rose more than 3 basis points to 4.82%.
One basis point is equal to 0.01%, and yields and prices move in opposite directions.
January nonfarm payrolls totaled 130,000 new jobs, far more than the 55,000 consensus estimate among economists polled by Dow Jones. Last month’s payrolls were also a vast improvement from December, as that month recorded a gain of 48,000 after being slightly revised downward.
In addition, the unemployment rate edged lower to 4.3%, below the forecast for an unchanged at 4.4%.
The report, delayed nearly a week by the partial government shutdown that ended Feb. 3, held consistent with a labor market in a low-growth mode, though with only scattered signs of increasing layoffs.
“With labor-market concerns mounting, this is the kind of report investors should welcome — even if it gives the Fed more room to remain on hold,” said Bret Kenwell, eToro U.S. investment analyst. “A modest dip in interest rates isn’t worth a meaningful deterioration in employment, particularly with corporate earnings growth still solid and consumer spending accounting for roughly two-thirds of U.S. GDP.”
Given the report came just a day after disappointing retail sales data for December, attention will now shift to the consumer price index for January, due out on Friday.
“This is one data point, and it doesn’t erase the recent softness elsewhere in the data. But if the labor market is indeed stabilizing, that would be constructive for both the economy and the market,” Kenwell added.
— With additional reporting by CNBC’s Jeff Cox
