U.S. Jan Nonfarm Jobs Data Sent Stocks Higher, Sent Bond Yields Up; Fed Rate Outlook Shifts

U.S. January nonfarm payrolls data, released on February 11, 2026, surprised expectations, sending Treasuries sharply lower as traders revised down the Federal Reserve’s 2026 rate outlook. Yields rose sharply: the 2-year yield jumped 9 bps to 3.55%, and the 10-year yield climbed 6 bps to near 4.20%. The first Fed pivot was moved to mid-July, with less than 5% probability of a March rate cut and an average 49 bps easing for 2026, down from 59 bps previously. Data showed 130,000 new nonfarm jobs in January, with the unemployment rate falling to 4.3%. Stronger labor market resilience expanded the Fed’s pause room, increasing pressure on longer-term Treasuries and futures. The yield curve inversion and heightened selling in 10-year Treasuries futures reflected the shift. The inversion also compressed yields for upcoming 10-year auctions, with yields climbing from ~4.14% to ~4.20% shortly after the report. Dollar-index strength briefly followed, with yen volatility and a slight gain. Market focus now turns to the upcoming inflation report, with officials signaling policy may remain鹰派 unless inflation trends downward more clearly.