Treasurys lifted by jobs report, euro zone worries

NEW YORK (CNNMoney.com) -- Treasurys gained Friday as a disappointing report on employment and a sinking euro revived worries about the health of the global economy.

What prices are doing: The benchmark 10-year note rose 1-12/32 to 102-17/32, pushing the yield down to 3.21%, from 3.36% on Thursday. Bond prices and yields move in opposite directions.

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The 30-year bond added 2-15/32 to 104-19/32 and yielded 4.13%. The 5-year note gained 25/32 to 100-21/32, yielding 1.99%, while the 2-year note rose 6/32 to 100-1/32, yielding 0.74%.

What's moving the market: A closely watched report from the government showed that employers hired less than expected in May, driving Treasury prices up and pressuring stocks.

Treasurys are viewed as low-risk investments because they are backed by the U.S. government and are attractive during times of economic uncertainty.

Employers added 431,000 jobs in May, missing the increase of 500,000 jobs expected by economists. Of the jobs, 411,000 were temporary Census positions, according to the Labor Department.

"The [jobs report] today indicates that the U.S. is not as healthy and job creation is not as robust as we anticipated," said William Larkin, a portfolio manager at Cabot Money Management.

Meanwhile, the euro plunged to a new four-year low versus the dollar and stocks tumbled as investors returned their focus to the euro zone's debt crisis.

"Everyone in the business of managing money right now is trying to calculate the impact of the European debt situation on the global marketplace," said Larkin. "We all know they had a spending issue, an economic slowdown and a debt crisis, and the implication of this is that they need to implement cost-cutting measures all across the board, which could mean economic contraction on a global scale."

Outlook: The euro's continued weakness, coupled with recent disappointing economic data in the U.S., points to a worrisome trend, said Larkin.

"We had all this economic momentum, and things had been improving, but we've come into this rough spot recently with such market turbulence," he said. "The best option right now is a flight to quality, which is to either U.S. Treasurys or the U.S. dollar."

Until uncertainty in the market eases and more convincing signs of a sustainable economic recovery arise, Treasurys will continue to be lifted, said Larkin.

"The risk is that people are looking at Europe and wondering how to fix an entire country," he said. "You can't come up with an answer to something like that, and this creates uncertainty, which leads to lots of volatility in the market."