By Sam Goldfarb 

U.S. government bond yields swung sharply Friday after a disappointing jobs report caught traders off guard but didn't fundamentally change Wall Street's mostly optimistic outlook on the economic recovery.

The yield on the benchmark 10-year U.S. Treasury note fell as low as 1.487%, according to Tradeweb, compared with roughly 1.570% just before the report was released and 1.561% Thursday. But it was recently back to 1.554% -- at the lower end of its trading range for the past several weeks.

Yields, which fall when bond prices rise, slid after the Labor Department said the economy added 266,000 jobs in April, well short of the 1 million new jobs that economists had anticipated and down from 770,000 jobs added in March.

The "report was pretty uniformly disappointing," said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. Still, it was "not all that surprising given the fact that economic data in the middle of a pandemic is always difficult to estimate," he said.

After starting the year below 1%, the 10-year Treasury yield climbed to around 1.75% in March, as investors bet that vaccine and government-spending fueled economic rebound would spur inflation above the Federal Reserve's 2% annual target. Yields have since subsided as investors take a more wait-and-see approach to the recovery.

Current yields, though, still reflect bets that the economy will be strong enough for the Fed to raise short-term interest rates within the next few years.

Friday's data was the latest in a string of economic reports this week that have come below analysts' expectations.

On Monday, the Institute for Supply Management's index of manufacturing activity came in at 60.7 in April -- down from 64.7 in March and below expectations for a 65.0 reading. On Wednesday, the ISM said its index of activity in the services sector fell to 62.7 in April from a record high of 63.7 in March. Economists polled by The Wall Street Journal had expected a reading of 64.1.

In both cases, the readings were still well above 50, indicating an expansion of economic activity.

Write to Sam Goldfarb at


(END) Dow Jones Newswires

May 07, 2021 10:26 ET (14:26 GMT)

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