After trending higher throughout much of the past two months, treasuries moved sharply lower during trading on Friday following the release of better than expected jobs data.
Bond prices showed a steep drop in early trading and saw some further downside over the course of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 12.1 basis points to 1.752 percent.
With the sharp increase eon the day, the ten-year yield regained some ground after ending the previous session at its lowest closing level in over four months.
The substantial weakness among treasuries came following the release of a report from the Labor Department showing stronger than expected job growth in the month of April.
The Labor Department said non-farm payroll employment increased by 165,000 jobs in April compared to economist estimates for an increase of about 145,000 jobs. The report also showed notable upward revisions to the job growth in the two previous months.
Paul Ashworth, Chief U.S. Economist at Capital Economics, noted that the stronger than expected job growth in April combined with the upward revisions will "go a long way towards soothing fears of another spring slowdown."
With the stronger than expected job growth, the unemployment rate edged down to 7.5 percent in April from 7.6 percent in March. The unemployment rate had been expected to come in unchanged.
The unexpected decrease pulled the unemployment rate down to its lowest level since hitting 7.3 percent in December of 2008.
The better than expected employment data overshadowed a separate report from the Institute for Supply Management showing that activity in the service sector expanded at a slower than expected pace in the month of April.
Following the slew of key economic events over the past week, the economic calendar for next week is relatively barren. Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, consumer credit and wholesale inventories.
Bond trading could also be impacted by the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.
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