NEW YORK (CNN/Money) -
Treasurys zipped higher Friday after a surprising decline in payrolls suggested that it may be a while before the Federal Reserve begins raising interest rates.
Just before 4:00 p.m. ET, the benchmark 10-year note surged 1-1/4 of a point in price to 99-6/32 to yield 4.35 percent, down from 4.50 percent late Thursday. The 30-year bond added 1-3/4 of a point to 102-21/32 for a yield of 5.19 percent, down from 5.31 percent Thursday.
The five-year note gained 31/32 of a point to 99-31/32, to yield 3.26 percent, while the two-year note rose 3/8 of a point to 100-18/32, yielding 1.71 percent. Bond yields and prices move in opposite directions.
The greenback, however, was mixed, retreating against the single European currency while making solid strides against the yen.
The dollar bought ¥116.83, up from ¥116.74 late Thursday. The euro purchased $1.1105, up from $1.0941 Thursday.
The Labor Department said the unemployment rate fell slightly to 6.1 percent in August, down from 6.2 percent last month. Economists surveyed by Briefing.com had expected the unemployment rate to hold steady at 6.2 percent. But despite the dip, the number of jobs lost rose by a surprising 93,000, compared with an expected gain of 18,000 jobs. In July, 44,000 jobs were reportedly lost.
The news comes on the back of a report Thursday showing that jobless claims bumped above the key 400,000 mark, seen as a contraction in the labor market, in the week ended Aug. 30.
Bonds gained strength from the report as equities weakened on fears that the economy may not be recovering as fast as investors had hoped -- or that a jobless recovery could be in store.
The payrolls figures seemed to convince the bond market that the Fed would stick to its promise of keeping interest rates low for a prolonged period, even if economic growth were to pick up speed.
"This is a lesson in history for bonds. Similarly to the early 1990s, strong GDP always scares bond holders, but what always matters is the labor market," Chris Low, chief economist at FTN Financial, told Reuters.
"If you don't have a strong labor market, you don't have inflation pressure. That's what really matters to a bond holder in the long run," Low explained.
Bond yields soared through much of the summer as investors began to see signs of an economic recovery, but have leveled off somewhat in recent weeks.
Meanwhile, there were widespread reports of Bank of Japan intervention against the yen Thursday, said by some sources to have been worth approximately $3 billion, according to Reuters.
Japanese officials have not confirmed the intervention, with top financial diplomat Zembei Mizoguchi saying only the foreign exchange policy was unchanged, the report said.
-- from staff and wire reports