2018.03.1119:32:00UTC+00Treasury Yields Rally after Solid Jobs Report Keeps Fed on Policy Path

U.S. government bond yields rallied after February's employment report indicated solid job gains but subdued wages figures, which, nevertheless, keeps the Federal Reserve on its path to hike rates two to three times this year.

The labor data also comes as investors wade through a wave of geopolitical developments, including the implications of steel and aluminum tariffs signed by President Donald Trump late Thursday, increased indications of easing monetary-stimulus measures outside of the U.S., and reports that Trump will meet with North Korean leader Kim Jong un in a landmark meeting.

The 10-year Treasury note yield rose 2.7 basis points to 2.894 percent, adding to a 3.9 basis points in the last week, MarketWatch data showed. The two-year note yield rose 1.2 basis point to 2.266 percent, continuing a 2.8 basis point gain in the previous week.

The 30-year bond rate rose 2.6 basis points to 3.159 percent, contributing to a weeklong increase of 3 basis points, the biggest since February 9.

Bond traders shed their Treasury holdings after the jobs data underscored the conundrum of solid job growth but weak wage growth. Investors said February's wages figures was unlikely to derail the U.S. central bank from its gradual rate hike path.

However, Chicago Fed President Charles Evans said that the employment report would not convince him to suppress his dovish stance on the a March move. According to CME Group data, traders in the fed fund futures are wagering on an 86 percent chance of a rate increase in the Fed's March policy meeting.