Bonds began the shortened pre-holiday session on the defensive thanks to overseas bond market angst. They rotated to highs on the weak unemployment print, however, then rolled back over again on a sharp gain in the ISM services index, and its firmer components.
Headline payrolls declined 30,000 in June, while the unemployment rate jumped to 6.4%, while the workweek, at 33.7 hours, and hourly earnings, at +0.2%, were close to expectations. Initial jobless claims also jumped 21,000, to 430,000, though this move was likely boosted by auto retooling.
The ISM services index gained 6 points to 60.6, to its best level since September, 2000. Prices paid rose from 49.6 to 51.4, adding insult to injury at the long-end of the Treasury curve, which was further deprived of deflation evidence.