NEW YORK (MarketWatch) -- Treasurys declined Friday after the Labor Department said the economy lost 533,000 jobs in November, the worst drop in 34 years.
Some investors and traders had been bracing for an even deeper loss, leaving Treasurys yo-yoing in early trading.
Benchmark 10-year note yields rose 2 basis points, or 0.02%, to 2.58%, near the lowest since the 1950s. Bond yields move in the opposite direction of prices.
Two-year note yields were little changed at 0.82%. Two-year note yields touched the lowest since the 1970s earlier this week.
Yields across the curve are heading for the fifth straight weekly decline.
"Yields are super low, so there is going to be some giveback," said George Goncalves, chief Treasury and agency debt strategist at Morgan Stanley.
Economists surveyed by MarketWatch predicted 350,000 jobs would be cut. The unemployment rate rose to 6.7%, the highest since 1993. See related story on jobs data.
The data adds to evidence that the recession may be accelerating, and may add to concerns among bondholders that it may raise Congress's willingness to pump up the economy, including a better chance of a bailout for U.S. automakers, all of which will be financed by increased debt issuance.
"The worse the number, the more the stimulus is coming," said Andrew Brenner, co-head of structured products and emerging markets at MF Global. "Hence, Treasurys are not rallying."
Fed cuts coming
The Federal Reserve could cut its target interest rate to 0.25% by early 2009 from 1% now, taking rates to the lowest on record, said James DeMasi, fixed-income strategist at Stifel Nicolaus & Co.
U.S. central bank officials next meet on Dec. 15 -16.
The payrolls report showed "a shockingly weak number," DeMasi said, "Investors and the public want to see that the government is engaged and it would show the Fed hasn't exhausted all of its' tools."
"This can provide a lot more fuel for rates to move lower from here, strange as it sounds," he said.
Yields on three-month bills , often sought in times of extreme fear, fell to 0.01%, near zero.
