Treasuries outlook: most US yields rise, jobs data keeps hawkish policy bets alive

Most US Treasury yields rose on Friday, with longer-dated yields briefly hitting multi-week highs, after US jobs data came in strong enough to keep expectations alive for tighter global central bank monetary policy. Trading was choppy after the US June employment report. Treasury yields initially tumbled, then quickly reversed 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, that was because more people were looking for work. While sluggish wage growth put a wrinkle in the otherwise upbeat report, analysts said it did not alter expectations that the Federal Reserve would raise interest rates again this year and begin unwinding its balance sheet.
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 2.398 percent and 30-year yields hit a more than six-week high of 2.943 percent.
Yields were also rising in Europe, with 10-year Bund yields hitting an 18-month high on Friday of 0.58 percent. US 10-year yields were on track for their steepest two-week increase in nearly four months. US 30-year yields were on course for their biggest two-week rise since just after the November 8 US presidential election.