NEW YORK: US Treasury prices weakened on Friday after data showed that US employers maintained a strong pace of hiring in October and boosted wages for workers, which supported the case for a December interest rate increase by the Federal Reserve.
Nonfarm payrolls increased by 161,000 jobs last month, the Labor Department said on Friday. August and September data was revised to show 44,000 more jobs created than previously reported.
"Marginally this makes it more likely that the Fed will go (raise rates) in December," said Aaron Kohli, an interest rate strategist at BMO Capital Markets in New York.
Benchmark 10-year note yields rose as high as 1.83 percent, from 1.80 percent before the data was released, before retracing back to 1.81 percent.
Two-year note yields, which are most sensitive to interest rate changes, increased to 0.83 percent, from 0.81 percent before the data.
"The number was very close to the consensus, which helped the market not react too much," said Kohli. "The front-end is bearing the brunt of the selloff, which makes some sense because this is really about the timing of the Fed."
The Fed kept interest rates unchanged during its two-day policy-setting meeting ended on Wednesday, but indicated a December hike was possible as the economy gathers momentum and inflation picks up.
Already high expectations of a December rate hike gave the US central bank room to not explicitly signal an impending hike.
The outcome of next week's US Presidential election may derail the Fed from a rate hike if it destabilizes financial markets.
Bonds have gained a safety bid this week as stocks slide amid election polls showing a tight race between Democrat Hillary Clinton and Republican Donald Trump.
Traders are pricing in a 76 percent likelihood that the Fed will raise rates in December, according to the CME Group's FedWatch Tool.
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