NEW YORK: US Treasury yields rose on Friday after data showed that US employment growth unexpectedly slowed in September but was stronger than initially reported in August, and traders kept bets that the Federal Reserve is likely to raise rates in December.
Nonfarm payrolls rose by 156,000 jobs in September, missing economists' expectations of 175,000. Job gains for August were revised up to 167,000 from an initially reported 151,000.
"The numbers were slightly worse, but the revisions brought it back in line, so all in all, it was fairly close to expected," said Justin Lederer, an interest rate strategist at Cantor Fitzgerald in New York.
Benchmark 10-year notes were last down 2/32 in price to yield 1.75 percent. Earlier the yield rose as high as 1.77 percent, the highest since June 3.
The yields have increased from 1.53 percent last Friday.
Traders reduced expectations that the Fed will raise US interest rates in November, lowering the probability to 9.3 percent after the data from 15.5 percent before, according to the CME Group's FedWatch Tool.
Expectations of a December rate hike have increased to 65.6 percent from around 64 percent before the jobs report, the CME data shows.
The unemployment rate ticked up a tenth of a percentage point to 5.0 percent in September. The increase was driven by Americans rejoining the labor force, which suggests slack remains in the job market.
"The thing that the Fed will notice is that the unemployment rate picked up," said Tom Porcelli, chief US economist at RBC Capital Markets in New York. "This is something that the doves in the Fed have really jumped on."
Investors will next turn attention to Fed Chair Janet Yellen's speech at a Boston Fed economics conference on Oct. 14 for any new indication on when a rate hike may be likely.
Retail sales data next Friday, before Yellen's speech, will also be watched for a further indication on the economy's strength.
The Treasury will sell $56 billion in coupon-bearing supply next week, including $24 billion in three-year notes, $20 billion in 10-year notes and $12 billion in 30-year bonds.
The bond market will be closed on Monday for the Columbus Day holiday.
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