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Treasuries Pull Back Following Upbeat Jobs Data

After trending higher over the past several sessions, treasuries showed a notable move back to the downside during trading on Friday.

Bond prices moved to the downside 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, climbed 5.6 basis points to 2.691 percent.

The pullback by treasuries came as the Labor Department's closely watched monthly jobs report showed much stronger than expected job growth in January.

The Labor Department said non-farm payroll employment surged up by 304,000 jobs in January compared to economist estimates for an increase of about 165,000 jobs.

However, the report also showed the spike in employment in the previous month was downwardly revised to 222,000 jobs from the initially reported 312,000 jobs.

Andrew Hunter, Senior U.S. Economist at Capital Economics, said the jump in employment in January still provides "further evidence that economic growth remains solid and that the government shutdown had little impact."

Traders largely shrugged off an unexpected increase in the unemployment rate to 4.0 percent, as the uptick reflected a rise in workers on temporary layoff as a result of the government shutdown.

A separate report from the Institute for Supply Management showed growth in the manufacturing sector unexpectedly reaccelerated in January after seeing a substantial slowdown in December.

The ISM said its purchasing managers index climbed to 56.6 in January from a revised 54.3 in December, with a reading above 50 indicating growth in the manufacturing sector.

Economists had expected the manufacturing index to edge down to 54.0 from 54.1 originally reported for the previous month.

Next week's trading may be impacted by reports on factory orders, service sector activity, and labor productivity and costs as well as remarks by Federal Reserve Chairman Jerome Powell.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury plans to sell $38 billion worth of three-year notes next Tuesday, $27 billion worth of ten-year notes next Wednesday and $19 billion worth of thirty-year bonds next Thursday.

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