NEW YORK (CNN/Money) -
Treasury prices eased from their rally early Friday but still posted impressive gains on news that July payrolls grew at no where near the rate expected.
At about 3:45 p.m. ET, the benchmark 10-year note jumped 1-14/32 points to 104-2/32 to yield 4.22 percent, down from 4.38 late Thursday. The 30-year bond added 1-29/32 points to 104-31/32 to yield 5.03 percent, down sharply from 5.14 late Thursday.
Bond prices and yields move in opposite directions.
Short-term Treasury prices also rose, with the two-year note up 14/32 of a point to 100-23/32 to yield 2.38 percent, and the five-year note added 1-1/32 points to 101-3/32 to yield 3.38 percent.
With the economy adding only 32,000 jobs in July -- in sharp contrast to the 228,000 predicted -- investors scaled back expectations for how far the Federal Reserve would raise interest rates this year.
Bond investors fear rising interest rates, and the rising inflation they represent, as inflation erodes the value of the fixed-interest investment.
Although most still expect a quarter-point hike at the Fed's meeting next week, they see a significant chance that the pace of moves will slow thereafter.
"If we get another jobs report as weak as this, there's no way the Fed will hike in September," said James Glassman, senior economist at J.P. Morgan. The Fed has four more meetings left this year, and the market had thought it would raise rates at each one, taking them to 2.25 percent in time for Christmas.
The chance of delayed interest-rate hikes was reflected in the currency market, with the dollar falling against the euro and the yen. Rising interest rates typically attract new capital to fixed income securities, such as certificates of deposit, which need to be purchased with U.S. dollars.
The euro bought $1.2288, up from $1.2060 late Thursday, and the dollar bought ¥110.30, down from ¥111.72 late Thursday.
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