U.S. jobs data lifts dollar, yields; Wall St. steady

Fri Jun 5, 2015 4:21pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Benchmark 10-year U.S. Treasury yields posted their steepest weekly jump in nearly two years and the dollar hit a 13-year high against the yen on Friday after jobs growth suggested the Federal Reserve will raise interest rates sooner than expected.

In a wild week for government debt, German Bunds posted their worst weekly losses since the euro's inception in 1999, spurred by a revised upward inflation forecast by the European Central Bank and blunt comments by ECB President Mario Draghi.

Uncertainty over Greece's debt obligations weighed on sentiment in Europe, but the surprisingly strong U.S. labor market report for May pared European equity losses and led Wall Street to close mixed near break-even.

U.S. nonfarm payrolls jumped 280,000 last month, the largest gain since December, while payrolls for March and April were revised to show 32,000 more jobs were created than previously reported, the Labor Department said.

The surge in jobs growth, coupled with a gain in average hourly earnings, led traders to move their bets on when the Fed will start to raise rates to as soon as October.

"Clearly jobs are being created at a very robust rate, and there's a rise in hourly pay. There is some sort of wind gathering there," said Wilmer Stith, a fixed income portfolio manager at Wilmington Trust in Baltimore.

U.S. benchmark Treasury debt yields jumped to their highest since October, while yields on two-year notes hit a more than four-year peak and five-year yields touched a six-month high.

The benchmark 10-year U.S. Treasury note fell 26/32 in price to yield 2.4022 percent. Earlier they touched an eight-month peak of 2.442 percent.   Continued...

One hundred dollar notes are seen in this photo illustration at a bank in Seoul January 9, 2013. REUTERS/Lee Jae-Won