Treasury Yields Jump After Better-Than-Expected Jobs Report

US treasury yields jumped higher last Friday after a report showing that job growth surged in January, further exacerbating the Federal Reserve's attempts to soften the labor market to bring inflation down.

The yield on 10-year treasury notes was up 12 basis points to 3.526% while the yield on the 30-year treasury notes was up 5.9 basis points to 3.614%. Yields and bond prices move in opposite directions.

Average hourly earnings rose 0.3% after gaining 0.4% in December, lowering the year-on-year increase in wages to 4.4% from 4.8% in December.

Job growth and wages are the chief concerns for the Fed in its attempt to lower inflation to its 2% target rate after inflation rocketed to four-decade highs last year.

The Fed is not seeing the large increase in unemployment that is normally associated with tighter monetary policy, but slower wage growth is an acceptable consolation prize.

Non-farm payrolls surged 517,000 jobs last month, smashing economists’ projection of payrolls increasing by 185,000 jobs. The unemployment rate fell to 3.4% from December's 3.5%.

The latest job growth report confirmed the stickiness of the labor market. The Fed has been trying to cool the economy through monetary policy measures, mainly via interest rate hikes. At the conclusion of its latest meeting last Wednesday, the US central bank increased rates by 25 basis points, but also said it was starting to see a slight slowdown of inflation.