U.S. Treasuries experienced a bear-flattening trend during early American trading, following the release of a stronger-than-expected employment report that showed the unemployment rate dropping to 4.3%. Although overnight index swaps (OIS) tied to Federal Reserve meeting dates generally shifted in a more hawkish direction, Treasuries managed to recover somewhat from their initial decline. In afternoon trading, mid-term bond losses widened after the 10-year Treasury note was auctioned at a yield higher than pre-issuance trading levels, dampening confidence ahead of Thursday's 30-year bond sale.

Shortly after 3 p.m. New York time, yields rose across the Treasury curve by 3 to 6 basis points. The yield spread between the 2-year and 10-year notes narrowed by 3 basis points, while the spread between the 5-year and 30-year bonds contracted by 1 basis point. The 10-year Treasury yield settled near the middle of its daily trading range, around 4.17%, up 3 basis points from Tuesday's close.

By the end of the session, OIS contracts linked to Fed meeting dates were pricing in approximately 53 basis points of interest rate cuts by year-end, down from prior expectations of 59 basis points. Following the jobs report, markets largely priced out the possibility of a rate cut at the March policy meeting.

The Treasury selloff extended slightly during afternoon trading after the results of the 10-year note auction were released. Primary dealers were awarded 13.4% of the auction, a higher share than in recent sales. Indirect bidders took 64.5%, while direct bidders received 22.1%.

As of 3:43 p.m. Eastern Time, the 2-year Treasury yield stood at 3.5119%. The 5-year yield was 3.7428%, the 10-year yield reached 4.1744%, and the 30-year yield was 4.8184%. The yield spread between 2-year and 10-year notes was 66.04 basis points, while the spread between 5-year and 30-year bonds was 107.38 basis points.