Treasuries experienced a marked upward trend over recent sessions but saw a significant reversal on Friday.
Bond prices fell sharply early in the day and stayed notably negative throughout the session. Consequently, the yield on the benchmark ten-year note, which inversely relates to its price, surged by 14.9 basis points to reach 4.430 percent.
This marked the first instance of an increase in the ten-year yield in seven sessions, rebounding from its lowest closing level in over two months.
The sharp decline in treasuries followed the release of a closely monitored report from the Labor Department, which revealed substantially stronger-than-expected job growth for May.
According to the Labor Department, non-farm payroll employment jumped by 272,000 jobs in May, following a downward revision to 165,000 jobs in April.
Economists had anticipated an increase of approximately 185,000 jobs, compared to the initially reported 175,000 jobs for the previous month.
The report also indicated that the annual growth rate for average hourly earnings accelerated to 4.1 percent in May, up from 4.0 percent in April.
Meanwhile, the Labor Department reported that the unemployment rate inched up to 4.0 percent in May from 3.9 percent in April, defying expectations that it would remain unchanged.
This unexpected rise in the unemployment rate pushed it to its highest level since January 2022.
Despite the increase in the unemployment rate, the stronger-than-expected job growth is likely to persuade the Federal Reserve to maintain higher interest rates for an extended period.
"Although this report is not uniformly strong, overall, it indicates a job market that remains quite tight. This likely means that the Federal Reserve will continue to hold rates at their current levels, as inflation is unlikely to fall back to target with this pace of wage growth," said Mike Fratantoni, Senior Vice President and Chief Economist at the Mortgage Bankers Association.
The Fed is scheduled to announce its latest monetary policy decision next week. While the central bank is widely expected to keep interest rates unchanged, greater attention may be focused on an upcoming report on consumer price inflation.
Additionally, reports on producer prices, import and export prices, and consumer sentiment and inflation expectations may also draw attention.
