2023.06.0219:34:00UTC+00Treasuries Give Back Ground Following Strong Jobs Data

Treasuries showed a significant move to the downside during trading on Friday, giving back ground after moving notably higher over the three previous sessions.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.3 basis points to 3.691 percent.

The pullback by treasuries came following the release of a closely watched Labor Department report showing U.S. employment surged by much more than expected in the month of May.

The report showed non-farm employment soared by 339,000 jobs in May after spiking by an upwardly revised 294,000 jobs in April.

Economists had expected employment to climb by 190,000 jobs compared to the jump of 253,000 jobs originally reported for the previous month.

Meanwhile, the Labor Department said the unemployment rate rose to 3.7 percent in May from 3.4 percent in April. The unemployment rate was expected to inch up to 3.5 percent.

"It's hard to say which is the bigger surprise, the huge, unexpected rise in payrolls or the equally huge, unexpected rise in the unemployment rate," said Chris Low, Chief Economist at FHN Financial.

"From the Fed's perspective, the rise in unemployment coupled with the drop in average hourly earnings should outweigh the shock of another huge job gain," he added. "After all, the weaker numbers stand in support of a pause they were leaning toward anyway."

Traders were also reacting to news the Senate voted to pass the bill raising the U.S. debt ceiling late Thursday night.

The Senate voted 63 to 36 in favor of the debt ceiling bill, with 17 Republicans joining with the majority of Democrats to approve the legislation.

Following the House approval of the bill Wednesday night, the bill now heads to President Joe Biden, who is expected to sign the legislation later today.

"No one gets everything they want in a negotiation, but make no mistake: this bipartisan agreement is a big win for our economy and the American people," Biden said in a statement following the Senate vote.

The U.S. economic calendar is relatively quiet next week, although traders are still likely to keep an eye on reports on service sector activity, the trade deficit and initial jobless claims.