Bonds sink on jobs report

NEW YORK (CNNMoney.com) -- Bond prices sank Friday after a report on the labor market revealed that the unemployment rate slipped to its lowest level in more than five years, dashing hopes the Federal Reserve would begin cutting interest rates anytime soon.

The dollar soared versus the euro and the yen.

The details See more

The benchmark 10-year note plunged 30/32, or $9.38 on a $1,000 note, to yield 4.72 percent, up from 4.60 late Thursday.

The 30-year bond dived 1-5/32, or $11.56 on a $1,000 note, to yield 4.82 percent, up from 4.72 the previous session.

Bond prices and yields move in opposite directions.

The five-year note tumbled 20/32 to yield 4.69 percent, while two-year note fell 8/32 to yield 4.82 percent.

Treasury prices plummeted after the government said the economy added 92,000 jobs in October.

While that fell short of expectations, the report also showed the unemployment rate fell to 4.4 percent during the month, its lowest level in five years.

"The economy is actually on firm ground and the bond market is being sold off heavily because the employment number caught people flat-footed," Chris Rupkey, vice president and senior financial economist at the Bank of Tokyo-Mitsubishi UFJ, told Reuters.

Bonds have rallied this week on a string of soft economic readings, but the closely-watched jobs report suggested underlying strength in the labor market.

Investors fear the low unemployment rate could prompt wage inflation, which could force the Fed to leave interest rates untouched or even raise them to curb inflation pressure.

In currency trading, the euro bought $1.2717, down from $1.2777 late Thursday. The dollar bought ¥118.02, up from ¥117.11 the previous session.

-- from staff and wire reports

Bond charts

Fed's Lacker: U.S. economy can handle more rate hikes