CHICAGO: US Treasury yields rose on Thursday after better-than-expected June jobs data boosted hopes that the economy was bouncing back from the coronavirus outbreak, although a surge in virus cases continues to threaten the recovery.

The benchmark 10-year yield was last up 1.9 basis points at 0.7006%.

Justin Hoogendoorn, head of fixed income strategic analytics at Piper Sandler in Chicago, said the reaction in the 10-year note was "muted," given the positive news, and could be due to Thursday's early market close ahead of the Fourth of July holiday.

The US Labor Department reported that nonfarm payrolls increased by 4.8 million jobs in June, surpassing a forecast of 3 million by economists in a Reuters poll. That was the most since the government started keeping records in 1939 and it followed the addition of nearly 2.7 million jobs in May.

Even as the economy perks up, Hoogendoorn said the Federal Reserve will still be keeping a watchful eye on interest rates.

"I think the Fed will continue to kind of keep rates low. But the key is not the level of rates. In my mind, the key is the slope of the curve. As long as that curve slope is positive, I think that shows really good things to come," he said.

Meanwhile, new cases of COVID-19, the illness caused by the coronavirus, shot up by nearly 50,000 in the United States on Wednesday, according to a Reuters tally, marking the biggest one-day spike since the start of the pandemic.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was up less than a basis point at 0.1664%.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was at 53 basis points, about 2 basis points higher than at Wednesday's close.