TREASURIES-US yields fall as weak jobs report raises Fed cut expectations

By Chuck Mikolajczak

NEW YORK, March 6 (Reuters) - U.S. Treasury yields were lower on Friday, dropping sharply after a government payrolls report fell well short of expectations and boosted views that the Federal Reserve may need to cut interest rates at a quicker pace.

The Labor Department said nonfarm payrolls decreased by 92,000 jobs last month, well short of the forecast of economists polled by Reuters that called for jobs to increase by 59,000, after a downwardly revised 126,000 increase in January.

The yield on the benchmark U.S. 10-year Treasury note US10YT=TWEB fell 0.6 basis points to 4.14% after hitting a three-week high of 4.179%.

The two-year US2YT=TWEB U.S. Treasury yield, which typically moves in step with interest rate expectations for the Fed, fell 1.6 basis points to 3.583%.

Expectations for a cut of at least 25 basis points from the Fed at its June meeting increased after the jobs report.