US government bond prices were little changed on Monday, with yields hovering at the high end of their recent range after the previous session's data-led sell-off, which was the steepest in more than three months.
An unexpectedly robust snapshot of the US labour market released on Friday suggested the Federal Reserve would not consider reducing interest rates until at least the second half of the year, sending Treasuries sharply lower.
On Monday, the market seemed to have found a footing, with benchmark 10-year notes trading 1/32 higher in price for a yield of 4.75 percent, just below the six-week high the yield hit on Friday.
"The 10-year is in a range-bound mode of 4.50 percent to 4.75 percent or perhaps even 4.80 percent, and anything in that range is a consistent story, and we really haven't broken out of that," said Joseph Di Censo, fixed-income strategist at Lehman Brothers in New York.
US stocks also were mostly steady, offering little inverse direction to bonds. Bond trade volume was well below average as some traders took a day off as European markets were out for the Easter Monday holiday.
"We still see a range-bound market but now we've moved to the upper end of the yield range," said Matthew Moore, economic strategist at Banc of America Securities in New York. "We think the Fed is on hold for now as inflation risks are outweighing growth concerns."
Indeed, the strength in the jobs data was broad-based. Not only did the 180,000 positions added to payrolls exceed forecasts, but the unemployment rate also fell, raising fears that wages could soon begin to accelerate.
"The bond bulls' case was dealt a severe blow with the strong non-farm payrolls report," said David Ader, government strategist at RBS Greenwich in Greenwich, Connecticut.
Still, yields seemed to have found solid support at current levels, with two-year notes steady and offering a yield of 4.74 percent. Five year-notes were trading flat in price for a yield of 4.67 percent, while 30-year bonds were 1/32 higher for a yield of 4.92 percent.
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