NEW YORK (CNNMoney.com) - Treasury prices surged and the dollar sank Friday after a monthly jobs report came in weaker than expected, fanning expectations the Federal Reserve will consider ending its rate hiking campaign when it meets later this month.

The yield on the 10-year note fell as low as 4.99 percent, resulting in a so-called yield curve inversion where the benchmark yield falls below that of the fed funds rate, which currently stands at 5 percent.

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In afternoon trading, the 10-year note rallied 26/32 to 100-31/32 to yield 5.00 percent, down from 5.11 percent late Thursday.

The benchmark yield inverted the fed funds rate for the first time in five years last Wednesday. Many economists view inversions, or when long-term interest rates are lower than short-term rates in the Treasury bond market, as signs of a slowing economy and believe it may give the Fed reason to pause its rate-hiking campaign. (Full story.)

The 30-year bond gained 1-13/32 to 90-30/32 to yield 5.10 percent, down from 5.20 late Thursday. Bond prices and yields move in opposite directions.

The five-year note rose 16/32 to yield 4.90 percent, and the two-year note increased 6/32, yielding 4.93 percent.

The Labor Department said employers added 75,000 jobs in May, well below the 170,000 gain economists surveyed by Briefing.com had expected. The report also showed average hourly earnings edged higher only 0.1 percent, below forecasts for a rise of 0.3 percent. (Full story.)

The report showed the unemployment rate fell to 4.6 percent, below expectations for it to remain at 4.7 percent, but investors focused on the overall softness of the report, which helped soothe concerns that rising wages and a tight labor market will add pressure to inflation.

Bond investors hate inflation because it erodes the value of the fixed-interest paying investments.

Treasury investors have been scrutinizing every economic report in search of clues for the interest rate outlook, but several economists said Friday's employment report could be the key signal that influences central bank policy makers when they meet June 28 and 29.

The payrolls report is the latest economic number to come in weaker than expected. On Thursday, investors took in a slew of reports, including a reading on manufacturing activity in May and construction spending in April, that suggested slowing economic growth.

The Fed has raised the target for its key short-term interest rate 16 straight times to 5 percent over the past two years in an effort to keep inflation at bay. Some investors are worried the Fed could overshoot with rates and end up choking off economic growth.

In currency trading, the dollar fell as lower interest rates generally hurt the dollar as they make dollar-denominated securities less attractive to foreign investors.

The euro bought $1.2928, up from $1.2796 late Thursday. The dollar traded at ¥111.56, down from ¥112.65 the previous session.

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