US Treasury debt prices fell on Friday, pushing yields to two-week highs, after strong jobs data dashed some of the last remaining expectations that the Federal Reserve would cut interest rates this year. Unexpectedly robust job growth in June and upward revisions to figures for April and May added to recent downward pressure on bonds.
Based on the rise in benchmark yields, the market was nearing its biggest week of losses in just over a year. The employment report was the latest in a series of data releases to indicate the economy rebounded strongly in the second quarter after a dismal start to the year, suggesting there was no need for a growth-boosting interest rate cut.
"The payrolls report led to a selloff, with the revisions to previous data making it a pretty solid report overall," said Matthew Moore, economic strategist at Banc of America Securities in New York. Prices on benchmark 10-year notes fell 8/32, pushing yields up to 5.18 percent from 5.14 percent late on Thursday. Benchmark yields reached a peak of 5.21 percent, their highest since June 22.
Two-year Treasury notes slid 1/32 for a yield of 5.00 percent. Two-year yields briefly rose to 5.02 percent, their highest since June 19. Five-year notes dropped 5/32, lifting yields to 5.09 percent from 5.05 percent. The 30-year long bond slid 19/32, pushing yields up to 5.27 percent from 5.23 percent.
The jobs report, one of the biggest monthly releases on the data calendar, added fuel to global bond market fears of a prolonged fight by the world's central banks to keep inflation under control.
Euro zone and British debt prices also fell on the news. In the US, investors have eliminated most of the last remaining bets on the Fed cutting benchmark rates from their current 5.25 percent, where they have been for a year. "The bond market has backed up on the growth data and we expect that to continue throughout the year," said Michael Pond, Treasury and inflation-linked strategist at Barclays Capital in New York. "We expect the bond market will factor in rate hikes in the coming months but it will take time to get there."
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