U.S. Treasury yields increased on Friday after the May jobs report indicated a stronger-than-expected labor market. The 10-year Treasury yield rose 5 basis points to 4.534%, the highest level since May 21. The 2-year Treasury yield climbed 7 basis points to 4.115%, reaching its highest level since May 20. The 30-year Treasury bond yield also increased by 5 basis points to 5.021%.
The nonfarm payrolls report showed an increase of 172,000 jobs in May, exceeding the Dow Jones consensus forecast of 80,000. The unemployment rate remained steady at 4.3%, with the leisure and hospitality sector adding 70,000 jobs, significantly above the average of 14,000 jobs per month over the past year.
The report suggests that the labor market is resilient, contradicting expectations for a gradual cooling. Economists have noted that job growth is concentrated in a few sectors, and layoffs are contained. Additionally, there are indications that artificial intelligence is beginning to impact employment in certain industries.
Christopher Rupkey, chief economist at Fwdbonds, stated that the strong labor market diminishes the argument for Federal Reserve rate cuts and emphasizes the need to focus on inflation risks. Recent comments from Federal Reserve officials indicate increased confidence in the labor market, shifting focus back to inflation and reducing expectations for near-term rate cuts. The central bank has maintained its policy this year after a reduction of three-quarters of a percentage point in late 2025.
