June 4 (Reuters) – U.S. Treasuries extended their gains on Friday after a government report showed a smaller-than-expected increase in payrolls in May, reinforcing the view of gradual U.S. economic recovery.
These latest job figures also bolstered the case that the Federal Reserve will not raise short-term rates until 2011.
U.S. employers created 431,000 jobs in May, the U.S. Labor Department said, below the 513,000 increase predicted by analysts polled by Reuters. The jobless rate fell more than expected to 9.7 percent from 9.9 percent in April. For more, see [ID:nOAT004640]
Benchmark 10-year Treasury notes US10YT=RR last traded up 28/32 in price at 101-30/33, compared with being 10/32 higher shortly before the employment data.
The 10-year yield, which moves inversely to price, was 3.27 percent, compared with 3.33 percent moments ahead of the jobs data. It ended at 3.37 percent on Thursday in New York.
(Reporting by Richard Leong, Editing by Chizu Nomiyama)