Bond Market

Prices of Treasury securities tumbled and yields soared to the highest level since November 1992 in a powerful market selloff Friday triggered by a report of unexpectedly steep jobs growth.

The selloff cut across the range of Treasury maturities, since economic strength can spur inflation that hurts the value of fixed-income securities.

But shorter-term Treasury securities were hit hardest as investors worried that the Federal Reserve Board will act soon to raise interest rates in order to contain inflation.

The central bank targets rates on short-term securities to carry out monetary policy changes. So far this year, it has raised short-term interest rates four times, and the higher rates have eroded the value of existing securities.

The monthly report from the Labor Department showed the economy added 379,000 jobs in June, about 100,000 more than expected by most economists. The unemployment rate stayed at 6 percent, instead of edging up to 6.2 percent as expected. The government also revised upward jobs growth from earlier months.

The tumbling dollar, meanwhile, heightened fears that foreign investors will dump their holdings of dollar-denominated investments such as U.S. Treasury bonds.