10-year Treasury Yield Hits 4-week High After Strong Jobs Report

Treasury prices fell Friday, with the 10-year yield rising to its highest intraday level in four weeks, after the Labor Department’s nonfarm payrolls report for January came in stronger than expected.

The 10-year yield was up 12.6 basis points to 1.941% in recent trade, according to Tradeweb data. The 10-year’s price is down more than 1%, the largest one-day loss since May 2014.

Bond yields move inversely to prices, rising as prices fall.

Hourly wage growth came in above analyst expectations with 0.5% growth in January, after recording the largest percentage drop since 2006 in December. After last month’s report, analysts speculated that the weak wage-growth number could cause the Federal Reserve to delay its first interest-rate increase in eight years.

January’s report was one of the rosiest in recent memory, with the average number of new jobs created according to the past three monthly reports rising to 336,000, the highest level since 1997. The Labor Department said 257,000 new jobs were created in January. Economists polled by MarketWatch had expected 230,000 new jobs.

“This is an unambiguously strong number [that] puts the Fed on the radar for the hike sooner than we anticipated for sure. There are no hidden nuances or subtleties, and we can even point to a gain in [the unemployment rate] as a function of higher participation which is a bullish sign for the economy,” said David Ader, head of government bond strategy at CRT Capital Group LLC.

Analysts now expect the Fed to move around the middle of 2015.

Comments from Fed officials have added credence to the notion of a midyear rate increase. Philadelphia Fed President Charles Plosser, on CNBC Friday, said it’s hard to justify not raising interest rates. Plosser is retiring from the Fed on March 1.

The yield on the two-year Treasury rose 12 basis points to 0.640%, its highest level in a month.

The 30-year Treasury added 10.1 basis points to 2.523%.