Dollar, stocks gain after stronger-than-expected U.S. jobs data

New York (Dec 6)   An unusually strong U.S. jobs report lifted the dollar to a five-and-a-half-year high against a basket of currencies on Friday and drove stocks higher, led by financial shares.
 
U.S. bond prices dropped, with the yield on U.S. two-year Treasuries US2YT=RR hitting the highest level since May 2011, as investors priced in a U.S. interest rate hike by mid-2015.
 
The Labor Department data showed U.S. employers hired more workers in November than during any month in nearly three years. Non-farm payrolls surged by 321,000, the most since January 2012 and topping forecasts for 230,000 new jobs. The unemployment rate held steady at a six-year low of 5.8 percent.
 
"It is unequivocally bullish on the U.S. economy," said Anthony Valeri, fixed-income strategist at LPL Financial in San Diego. "We'll need more evidence, but it definitely contradicts the low-yield environment we have been in."
 
U.S. short-term interest-rate futures contracts dropped as traders bet the Federal Reserve would raise interest rates in July 2015 - earlier than formerly thought.
 
The jobs report caused the yield on U.S. two-year Treasuries US2YT=RR to rise nearly 9 basis points. The yield curve flattened, with the differential between the five-year note and the 30-year bond falling to its lowest level since January 2009.
 
The benchmark 10-year U.S. Treasury note US10YT=RR was down 20/32 in price, with the yield at 2.326 percent.
 
The dollar rose against a basket of currencies .DXY to its highest level since March 2009. The dollar climbed to its highest level against the yen JPY= since late July 2007.  

Source: Reuters