US Treasuries Stumble as Strong Labor Market Lifts Fed-Hike Bets

(Bloomberg) -- Treasuries dipped after an unexpected surge in US job growth led traders to add to wagers that the Federal Reserve will raise interest rates when officials next meet in December.

The declines on Friday pushed yields higher across maturities, with those on two-year notes — more sensitive to the outlook for the Fed's rate path than longer peers — up by as much as seven basis points to 4.54%. The 10-year yield was four basis points higher at 4.87% after data showed the US added 165,000 jobs in October, topping forecasts.

Traders maintained expectations of further rate hikes from the US central bank, pricing in a 70% chance of a quarter-point rate hike next month. All told, the market expects at least 40 basis points of additional tightening by September 2027.

Non-farm payrolls rose 165,000 last month, beating a forecast gain of 65,000, and the unemployment rate dipped to 4.1%. Revisions for prior months were positive and wage growth also picked up to 3.1% for the past year.