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Treasury Yields Remain Lower After Jobs Report, Investors Shift to Safe Assets Amid Ukraine Crisis

Source: NYSE

Treasury yields slumped on Friday as investors continued to buy safe-haven assets amid Russia-Ukraine conflict. The decline in yields came even after a strong jobs report.

The yield on the benchmark 10-year Treasury note dropped more than 10 basis points to around 1.73%. The yield on the 30-year Treasury bond fell 7 basis points to roughly 2.15%. Yields move inversely to prices and 1 basis point is equal to 0.01%.

Nonfarm payrolls for January grew by 678,000 and the unemployment rate was 3.8%, the Labor Department's Bureau of Labor Statistics reported Friday. That compared to estimates of 440,000 for payrolls and 3.9% for the jobless rate.

Meanwhile, wages barely rose for the month, up just 1 cent an hour or 0.03%, compared to estimates for a 0.5% gain. The year-over-year increase was 5.13%, well below the 5.8% Dow Jones estimate. It could be a sign that surging inflation could be easing.

"Ahead of the data the Treasury market was rallying and since the release it has done the same -- a remarkable willingness to ignore the US data in favor of the geopolitical uncertainties," said Ian Lyngen, BMO's head of U.S. rates.

This is the last jobs report before the Federal Reserve's next meeting, where the central bank is expected to begin hiking interest rates. Fed Chair Jerome Powell said on Wednesday that he is leaning toward supporting a single 25-basis point hike in March.

The report was "quite a strong statement that we're making continued rapid progress on employment," said Jan Hatzius, chief economist at Goldman Sachs, said on "Squawk on the Street."

Another surprise in the report was hourly wages, which was little changed month over month and rose slower than expected year over year. Hatzius said this reading was "noisy" but still a slight positive for the market.

"At the margin, I'd say it reduces slightly the concerns about labor market overheating," he said.

Russia continues to escalate its invasion of Ukraine. Russian forces attacked Ukraine's Zaporizhzhia nuclear power plant early on Friday morning, causing a fire to break out at an adjacent training facility.

Ukraine's nuclear agency said Russian military forces have taken control of the facility.

— CNBC's Yun Li contributed reporting.

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