Treasury yields surged Friday trading after the June jobs report showed the U.S. labor market was still holding up despite global growth headwinds, leading to a partial reversal of bets the Federal Reserve would cut rates several times this year.

What are Treasurys doing?

The 10-year Treasury note yield

TMUBMUSD10Y, +4.66%

climbed 9.3 basis points to 2.044%, its biggest one-day climb since Jan. 4. The benchmark maturity rose 4.4 basis points this week, its largest such gain in nearly three months.

The 2-year note yield

TMUBMUSD02Y, +6.25%

sensitive to expectations for the path of interest rates, surged 10.5 basis points to a three-week high of 1.870%, marking its biggest daily rise since February 2015. The 30-year bond yield

TMUBMUSD30Y, +2.98%

rose 8.1 basis points to 2.48%, recording its biggest daily rise since Oct. 3, 2018. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

U.S. government bonds sold off after a stronger-than-expected nonfarm payrolls number as investors unwound bets on aggressive Fed easing later this year. The U.S. economy created 224,000 jobs in June, well above analysts’ estimate for 170,000 jobs. The unemployment rate edged up to 3.7%, still near a 50 year low, while the average hourly earnings rate ran at a 3.1% pace.

Some analysts now say the U.S. central bank will likely leave interest rates unchanged in July, postponing a rate-cut decision for September. Traders on the fed fund futures market, who have shown elevated expectations for rate cuts compared with Wall Street economists, still anticipate a single quarter percentage point rate cut in July, though they sharply lowered their expectations for a half percentage point cut next month.

See: It’s ‘hallucinatory’ to expect a half-point Fed rate cut now — but economists still expect a quarter-point reduction

Signs of slower global growth and a softening manufacturing sector had put Wall Street on alert for a deterioration of the jobs market. Friday’s jobs data could help reverse the increasingly dour economic sentiment that has driven the relentless rally in government bonds in 2019.

Read: Labor market comes roaring back as jobs see ‘nice pop,’ economists say

What do market participants say?

“This jobs report gives the option the Fed to stay on hold in July. A rate cut was not a done deal. As of right now, this is a positive report and the Fed now has the ability to watch the data unfold. We’re going to see a repricing of rate-cut expectations on the front-end of the curve,” Lindsay Bernum, global macro analyst at Smith Capital Investors, told MarketWatch.

“Despite the strong labor market reducing some urgency for a near-term Fed rate cut, we continue to look for a cut later this month as global cross-currents have picked up,” wrote economists at Oxford Economics, in a note to clients. “The Fed has pointed to the slowing in global growth and the lingering trade policy uncertainty as reasons to implement insurance rate cuts.”

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