Treasury Yields Soar after US Non-Farm Payrolls Trounce Forecasts

Treasury yields and the U.S. Dollar are moving higher while stocks and gold are sharply lower after the employment picture started off 2023 on a surprisingly strong note, with Non-Farm Payrolls posting their strongest gain in six months.

Non-Farm Payrolls increased by 517,000 for January, above the Reuters estimate of 185,000. The previous month’s number was also revised higher to 260,000.

Meanwhile, the unemployment rate fell to 3.4% versus the estimate for 3.6%. The prior month was 3.5%.

Average Hourly Earnings rose 0.3% as expected, but the December figure was revised higher to 0.4%. On a year-over-year basis, average hourly earnings were 4.4% versus 4.3% expected. Last month, they came in at 4.6%.

According to the government’s report, growth across a multitude of sectors helped propel the massive beat against the estimate.

Leisure and hospitality added 128,000 jobs to lead all sectors. Other significant gainers were professional and business services (82,000), government (74,000) and health care (58,000).

Market Reaction

U.S. Treasury yields rose Friday after jobs data came in much better than expected.

The 10-year Treasury yield was up about 7 basis points at 3.467%. The 2-year Treasury was up around 11 basis points to 4.197%.

According to CNBC, “The data underscored the stickiness of the labor market. The Fed has been trying to cool the economy through monetary policy measures, including interest rate hikes. At the conclusion of its latest meeting on Wednesday, the central bank increased rates by 25 basis points, but also said it was starting to see a slight slowdown of inflation.