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10-Year Treasury Yield Rises Above 1.6%, Shaking Off Weak September Jobs Report

Erin Scott | Bloomberg via Getty Images

Treasury yields climbed in volatile trading on Friday as investors digested a disappointing jobs report.

The yield on the benchmark 10-year Treasury note last traded up 6 basis points to top the 1.60% level, hitting its highest level since June 4. The yield on the 30-year Treasury bond also rose 2 basis points to 2.16%. Yields move inversely to prices.

Nonfarm payrolls rose by just 194,000 in the month of September, compared to the Dow Jones estimate of 500,000, the Labor Department reported Friday. The unemployment rate fell to 4.8%, the same level seen in late 2016 and better than the expectation for 5.1%.

The headline number was hurt by a 123,000 decline in government payrolls, while private payrolls increased by 317,000. Despite the weak jobs total, wages increased sharply. The monthly gain of 0.6% pushed the year-over-year increase to 4.6%.

While the topline number was much worse than forecast, some traders took solace in the better-than-expected unemployment rate. Meanwhile, August's jobs figure was revised upward by more than 130,000 payrolls.

Federal Reserve officials are watching the jobs numbers closely. The central bank has indicated it will soon start rolling back on some of the monetary stimulus it provided during the pandemic crisis, primarily because inflation has met and exceeded the Fed's 2% goal.

Some believe that the latest jobs report doesn't change the Fed's outlook for tapering later this year.

"This should be more than sufficient to keep tapering on schedule for the November announcement," Ian Lyngen, BMO's head of U.S. rates, said in a note. "Wage inflation only adds to the Fed's argument for tapering. Overall, a mixed report that does little to shift the macro narrative."

Elsewhere, Fed Bank of Dallas President Robert Kaplan is due to retire on Friday, succeeded on an interim basis by the first vice president at the Dallas Fed, Meredith Black.

Kaplan announced his retirement last week, stepping down following recent controversy over stock market trades he made.

There are no auctions scheduled to be held on Friday.

— CNBC's Elliot Smith contributed to this report.

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