Treasury yields skyrocketed on Friday as the November jobs report showed the U.S. economy added more jobs than expected.
The yield on the 10-year Treasury added 8 basis points to 3.64%. On Thursday, it declined by as many as 19 basis points. The 2-year Treasury yield surged 14 basis points to 4.41%.
Yields and prices move in opposite directions, and one basis point is equivalent to 0.01%.
Nonfarm payrolls soared 263,000 for the month while the unemployment rate stood at 3.7%, the Labor Department reported Friday. Economists surveyed by Dow Jones had been looking for an increase of 200,000 in the payrolls number and 3.7% in the jobless rate.
In another blow to the Fed’s anti-inflation efforts, average hourly earnings gained 0.6% for the month, double the Dow Jones estimate. Wages were up 5.1% on a year-over-year basis, also well above the 4.6% expectation.
BMO’s head of U.S. rates, Ian Lyngen, called the jump in average hourly earnings the most surprising detail in the report.
“Overall, this is a report that solidifies 50 bp from the FOMC in less than two weeks — with the wage data and unanticipated drop in participation reinforcing the case for a longer period in restrictive territory in 2023 (and possibly beyond),” Lyngen said.
