Short-dated US Treasury yields edged higher on Friday after surprisingly strong US jobs data raised expectations slightly for a Federal Reserve rate hike this year, while long-dated yields hovered near record lows on persistent concerns about global growth.
Nonfarm payrolls increased by 287,000 jobs in June, the largest gain since last October, but average hourly earnings increased by only 2 cents, or 0.1 percent, the Labour Department said. May's payroll count was revised down to only 11,000 from the previously reported 38,000.
The US yield curve flattened, with short-dated yields, which are more vulnerable to Fed interest rate increases, inching higher. After rising briefly after the jobs data, the yield on the US 30-year bond tumbled on concerns surrounding global economic growth, in part stemming from Britain's June 23 vote to exit the European Union. Two-year yields were last up about two basis points at 0.613 percent after hitting a two-week high of 0.657 percent following the data. Three-year yields were also up two basis points, at 0.705 percent, after touching an eight-day high of 0.759 percent.
Bond yields move inversely to prices. US 30-year yields were last down three basis points at 2.108 percent, a basis point away from a record low of 2.098 percent touched Wednesday. Long-dated yields fell as low as 2.102 percent during the session. Benchmark 10-year yields were last down two basis points at 1.366 percent after briefly hitting 1.442 percent after the data. Benchmark yields touched record lows of 1.321 percent Wednesday.
Expectations for a December rate hike by the Fed increased slightly to a 23 percent probability from 19 percent after the US jobs data, according to CME Group's FedWatch. But expectations for a rate increase exceeded 50 percent only for 2018 and beyond. Benchmark 10-year yields were set to post a seventh straight weekly decline, while 30-year yields were on track to post a sixth weekly decline. Two-year yields were set to post their first weekly increase in seven weeks.