The Labor Department's payrolls report showed that a drag from a strike at General Motors was offset by gains elsewhere, while hiring in the prior two months was stronger than previously estimated, signaling that consumers could continue to prop up the slowing economy for a while.
The unexpected strength of the labor report kept US yields buoyant despite new data from the Institute for Supply Management (ISM) released later Friday morning, which said the manufacturing sector contracted for a third straight month in October, though at a slower pace than the previous month.
"Today's late-morning US reports revealed a small October ISM rise to a still sub-50 reading of 48.3 that would have weighed on the market were it not for this morning's robust US jobs report that sharply truncated the downside risks for the economy. The pockets of weakness in some sentiment surveys now look more like strike-distortions or outliers," wrote analysts at Action Economics.
This morning's reports come on the heels of the Federal Reserve's decision to cut interests rates on Wednesday for the third time this year to help the United States weather the global trade war without spiraling into recession. However, the Fed dropped a previous reference in its policy statement that it "will act as appropriate" to sustain the economic expansion - language that was considered a sign of future rate cuts.
"The Fed's statement that there's no imminent need to ease is well supported by (the employment report). It is a report that gives the Fed comfort that they did the right thing," said Doug Duncan, chief economist at Fannie Mae.
"Manufacturing was down 36,000 jobs, so there was clearly a hit to that," Duncan said. "But if you think about the share of our workforce today, it's now less than 10% of our total workforce. We're now a services-based employment economy, so there's a question about whether or not the downturn in employment in that space is enough to move the whole economy lower."
The benchmark 10-year yield was last up 4.2 basis points to 1.733%. The two-year yield, a proxy for market expectations of interest rate moves, was up 3.6 basis points to 1.562%.