U.S. Government Bond Yields Slip After Jobs Data

U.S. government-bond yields and the dollar fell Friday after a tepid jobs report signaled the labor-market recovery may take longer than expected. 

The yield on the benchmark 10-year Treasury note finished Friday’s session at 1.559%, according to Tradeweb, down from 1.624% at Thursday’s close. That marked the third straight week of declines. The WSJ Dollar Index, which measures the U.S. currency against a group of others, slipped 0.5%.

Yields, which rise when bond prices fall, slipped after the Labor Department said the economy added 559,000 jobs in May, up from the 278,000 jobs in April but short of the 671,000 jobs that economists surveyed by The Wall Street Journal had anticipated. The jobless rate came in slightly below their expectations of 5.9%, falling to 5.8% in May from 6.1% in April.

The 10-year yield, which tends to rise when investors expect periods of growth and inflation, has spent months stalled near 1.6%. The key measure of borrowing costs started the year below 1% before rising to around 1.75% in March, lifted by bets on a speedy recovery and higher-than-expected inflation, which erodes bonds’ fixed interest payments and can spur the Federal Reserve to raise interest rates. Signs that the rebound has proceeded more moderately have helped drive the stall, some analysts said. 

Friday’s yield moves suggest investors aren’t making significant changes to their economic outlook, analysts said. Many expect the return to full employment to take some time, but are monitoring the Fed for signs of a shift away from easy-money policies. Analysts say a weaker-than-expected jobs number decreases the prospect of that.

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