Treasury yields hold steady after upbeat March jobs report Friday

U.S. Treasury yields stabilized Monday around Friday's post-jobs levels after March payrolls crushed estimates at 178,000 versus 60,000 consensus forecasts. The 10-year note yield held near 4.344% barely budging from 4.32% pre-report while the two-year note sat at 3.89%, reflecting anchored short-end pricing despite robust labor data. Unemployment ticked down to 4.3%, with revisions adding 20,000 prior months.

Investors parsed conflicting signals: hawkish jobs print cemented Fed's no-cut March stance, yet Iran ceasefire buzz capped long-end selling pressure. Friday's initial 14 basis point 10-year surge to 4.36% reversed half the move as oil eased off $112 peaks amid truce speculation. Dollar index slipped 0.2% versus euro, underscoring risk-on flows.

Bond math weighs stagflation risks from Trump's 25% universal tariffs projected 1.8% core PCE acceleration against Hormuz reopening's $15/barrel deflationary impulse. Market-implied Fed funds held steady at 4.25-4.50% through June, pricing single 2026 trim versus three pre-war.

Market dynamics diverged: curve bull-flattened three basis points as short-end stability outpaced long-end grind. Agency MBS spreads tightened five ticks amid duration demand, while corporate investment-grade added 2 cents on deck. Swaps priced terminal rate at 3.85%, aligning with Powell's "higher for longer" pivot.

Corporate treasury desks locked six-month funding at sub-5% coupons, extending liability management post-Q1 deluge. Pension rebalancing absorbed $18 billion duration, offsetting retail flows chasing 4.7% money-market yields.

Volatility subsided versus March's 40 basis point weekly swings tied to war headlines. Positioning shows funds net short $450 billion 10-year futures the most bearish since 2023 vulnerable to tactical safe-haven bids.

Traders eye Tuesday's Trump 1 p.m. ET Iran remarks for directional cues, with payrolls strength reinforcing soft-landing narrative despite energy distortions. Yields' post-data steadiness signals digested resilience absent recession confirmation.