By Deborah Lynn Blumberg Of DOW JONES NEWSWIRES NEW YORK (Dow Jones)--Treasury prices were lower Friday in jumpy trading on the heels of the latest U.S. jobs report, which was weak, but not quite as dire as some had thought. Many markets participants had expected a much worse June jobs report given the recent string of weak U.S. data. When that didn't materialize, Treasury prices slipped. Still, with the economic outlook uncertain, Treasurys remain in favor and the bond market is on track for weekly gains. In recent trading, the 10-year yield was at 2.948%, about 16 basis points lower than its level just a week ago. The two-year note was flat in price to yield 0.637% and the 30-year was off 20/32 to 3.898%. The 10- and 30-year yields were at levels that were last seen back in April 2009. Trading was volatile ahead of the long holiday weekend. Markets will be shuttered Monday for the July 4 holiday in the U.S. The market was weaker early Friday and took another leg down after the June jobs data, which showed the unemployment rate unexpectedly fell to 9.5% from 9.7%. It had been expected to tick up to 9.8%. But as investors digested the data, which showed the economy lost 125,000 jobs last month, Treasury prices improved; a drop of 110,000 was expected. In recent trading, most Treasury prices were just modestly lower. The drop in Treasury prices "doesn't mean the number was not weak but rather that the worst is priced in," said David Ader, head of government bond strategy at CRT Capital Group LLC. Rick Klingman, managing director of Treasury trading at BNP Paribas in New York, called the data "a mixed bag." "Given the average type of numbers, there is not much need to buy Treasurys at this point," Klingman said. "The data still shows the economic recovery is in fragile territory." The jobs report showed that the U.S. economy shed jobs in June for the first time this year. Only 83,000 private-sector jobs were added last month, less than the 110,000 expected. The unemployment rate fell, but the drop was due to fewer people searching for employment. The report follows what have been disappointing pieces of U.S. data this spring and summer, which have exacerbated fears that the pace of the U.S. economic recovery is slowing. Market participants are worried the recovery could falter in the second half of the year when government stimulus dwindles. Recent data have shown that new home sales in May plummeted by almost 33% to a record low, while consumer confidence plunged and U.S factory activity slowed in June. Given the weaker numbers, policy makers have been cautious on the economic outlook as well. Earlier this week, Federal Reserve Bank of Atlanta President Dennis Lockhart said the economy still lacks a solid base and that the current weakness, and threats such as the euro-zone debt crisis and ongoing state and local fiscal tightening, leave the U.S. economy at risk of deflation, or a drop in general price levels. -By Deborah Lynn Blumberg, Dow Jones Newswires; 212-416-2206; deborah.blumberg@dowjones.com

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