US Treasury bonds are falling, and 10-year treasury bond yields are likely to rise for the first time in six weeks, as better-than-expected employment reports reinforce market expectations that the Fed will reduce stimulus in the pandemic era.

As of 10:16 New York time, 10-year US Treasury yields rose 6 basis points to 1.29%. The yield on 5-year treasury bonds rose 4 basis points to 0.76%; previously it hit the highest level since July 16. The dollar rose to a 1-week high.

The Ministry of Labor's report on Friday showed that non-farm employment increased by 943,000 in July, and the June data was revised up to 938,000. Economists surveyed by Bloomberg expected a median value of 870,000 people. The unemployment rate fell to 5.4% in July, the lowest since March 2020.

At the time the employment report was released, the Federal Reserve was discussing when and how to reduce the monthly bond purchase size of 120 billion US dollars. Federal Reserve Vice Chairman Richard Clarida made hawkish remarks that surprised some investors on Wednesday, saying that the Federal Reserve will start cutting the size of bond purchases later this year and then raise interest rates in 2023.

Wells FargoStrategists Mike Schumacher and Erik Nelson said in Friday's report that although the “steady” employment report is not enough to speed up the Fed's downscaling period, “it should keep some hope of early reduction for at least the next few days. This should temporarily support yields and the US dollar exchange rate.”

Prior to Clarida's speech on Wednesday, US Treasury yields had been declining steadily, driving real yields to record lows as people feared that a resurgence of the pandemic might slow economic recovery. Market sentiment began to shift after Clarida described an optimistic outlook. The 10-year real yield fell to a record low of -1.22% before his speech, and has since risen 14 basis points.