10-year Treasury yield jumps after stronger-than-expected jobs report

Treasury yields climbed on Friday after closely watched nonfarm payrolls data for March surged past expectations.

The 10-year Treasury yield jumped 8 basis points to 4.387%. The benchmark note on Wednesday briefly touched a new 2024 high of 4.429%.

The 2-year Treasury yield was also higher by 7 basis points at 4.711%. Yields and prices move in opposite directions. One basis point equals 0.01%, or 1/100th of a percent.

Nonfarm payrolls increased 303,000 in March, far above expectations for an increase of 200,000 and higher than the downwardly revised 270,000 gain in February, the Labor Department’s Bureau of Labor Statistics reported Friday. The unemployment rate held steady at 3.8%, as Wall Street had expected.

The jobs figures plays into market expectations of when the Federal Reserve will start to cut interest rates. With the labor market strong, the central bank can continue beating back inflation and wait longer to ease monetary policy.

The central bank “will be quite content sitting on the sidelines and doing nothing until inflation materially breaks lower,” Adam Crisafulli of Vital Knowledge said in a note. “If inflation doesn’t cool and job gains continue at anywhere close to this pace, it could be a while before the Fed decides to cut.”

At its last meeting, the central bank indicated that it still expects three rate cuts by the end of this year. But Minneapolis Fed President Neel Kashkari on Thursday became the latest high-profile figure to question whether there will be any rate cuts if inflation remains above the Fed’s 2% target.

“If we continue to see inflation moving sideways, then that would make me question whether we need to do those rate cuts at all,” Kashkari told told Pensions & Investments in an interview, adding that the economy has been “very resilient.”

Interest rate futures show that traders don’t expect the Fed to adjust rates at its next meeting on May 1, according to the CME Fed WatchTool, and see a 43% chance that rates will also stay unchanged at the June gathering — up from less than 28% a month ago. While Kashkari gets to share his views at Federal Open Market Committee meetings, he does not vote until 2026.