Most US yields rise as jobs data keeps hawkish policy bets alive

NEW YORK: Most US Treasury yields rose on Friday, with longer-dated yields briefly hitting multi-week highs, after mixed details of a US June employment report did not derail expectations of tighter global central bank monetary policy.

Trading was choppy in the Treasury market after the US jobs data, with yields initially tumbling and then quickly reversing course. Longer- and medium-dated yields were last higher on the day, while shorter-dated yields were stable to slightly lower but remained high on a historical basis.

Nonfarm payrolls jumped by 222,000 jobs, the US Labor Department said, beating economists' expectations for a gain of 179,000. While the unemployment rate rose to 4.4 percent from 4.3 percent in May, that was because more people were looking for work, a sign of confidence in the labor market.

While sluggish wage growth put a wrinkle in the otherwise upbeat report and signaled lagging inflation, analysts said the report did not alter expectations that the Federal Reserve would raise interest rates again later this year and begin unwinding its balance sheet.

With a hawkish Fed still in place, most yields resumed the uptrend they began last week on anticipation that the Fed would tighten monetary policy roughly in unison with the European Central Bank and Bank of England, whose chiefs made suggestions last week that they were shifting toward less accommodative policy.

"(The US bond market) is not massively altering its course based on this report," said Shyam Rajan, head of US Rates Strategy at Bank of America Merrill Lynch in New York. "I do think strongly that we'll go back to being driven by Europe."

Benchmark 10-year Treasury yields hit a more than eight-week high of 2.396 percent and 30-year yields hit a more than six-week high of 2.943 percent after the US jobs data.

Treasury yields were moving in tandem with rising yields in Europe, with 10-year Bund yields hitting a roughly six-month high on Friday of 0.58 percent.

Analysts attributed the stable to slightly lower status of shorter-dated yields to the disappointing aspects of the US jobs report. US two-year yields were last at 1.403 percent, from 1.406 percent late Thursday.

"The initial dip in rates was a function of the small increase in the earnings number and the uptick in the unemployment rate," said Kim Rupert, managing director of global fixed income at Action Economics in San Francisco.