Treasuries closed slightly higher on Friday after an early surge driven by an unexpected drop in U.S. employment, though gains were trimmed as Middle East tensions lifted oil prices. The yield on the benchmark ten-year note edged down 1.0 basis point to 4.660 percent, well off its session low of 4.603 percent. The Labor Department reported non-farm payrolls fell by 23,000 jobs in July, against expectations of an 88,000 increase, which reduced the probability of a Federal Reserve rate hike next month to 44 percent from 55 percent, according to CME Group's FedWatch tool. However, bonds retreated from highs as crude oil jumped amid attacks by Iran-aligned Houthis in Yemen and Saudi Arabia, Israeli strikes in Lebanon, and Iran's move to bar certain vessels from the Strait of Hormuz.
Weak jobs data reduces Fed rate hike odds, lowering yields.
