"With the 10-year U.S. yield back above the 3.40% mark, and little buying interest at sub-7% for the benchmark, yields should inch towards the 7.05%-7.10% zone as the week progresses," a trader with a private bank said.
U.S. Treasury prices slumped, with yields jumping after the release of labour data that showed April employment and wage figures had outpaced market expectations. Non-farm payrolls rose by 253,000 jobs last month, but the economy created 149,000 fewer jobs in February and March than previously reported. Economists polled by Reuters had forecast payrolls would rise by 180,000.
The U.S. Labor Department's closely watched jobs data also showed the unemployment rate falling back to a 53-year-low of 3.4%. Wages grew by 0.5% against the economists' forecast of 0.3%. The data pointed to persisting strength in the labour market that could compel the Federal Reserve to keep interest rates higher for longer as it fights to bring inflation under control. The Fed raised rates by 25 basis points last week and signaled a pause in its tightening cycle at the next few meetings, while a majority of market participants expect the U.S. central bank to start cutting rates from September.
Still, weaker-than-expected demand for the benchmark paper
at its auction on Thursday led to the belief that investors are
not comfortable going long at current levels. The yield dipped
below 7% on Thursday, the first such instance in 13 months.
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
