Yields on U.S. Treasuries rose Friday after Labor Department data showed employment increased more than expected in May, which could pressure the Federal Reserve to hike interest rates later this month.

The yield on benchmark 10-year Treasury notes US10Y was up 8.3 basis points to 3.691%.

The trading showed “a market reacting to strong economic data and expecting that as a likely driver of higher Fed rates for longer,” said Ron Temple, chief market strategist for Lazard.

But the report also showed moderating wage growth, which could be an argument for the Fed to skip the rate hike as officials had suggested earlier this week. Such thinking temporarily brought the 10-year yield down from an early-morning high of 3.662% just after the data was released at 8:30 am U.S. Eastern time, before it resumed its climb.

“This is a reflection of a labor market that while still robust, is softening gently, not rapidly,” said Art Hogan, chief market strategist for B. Riley Wealth. He added that “The Fed has enough evidence in hand to take a pass at the next meeting.”

Hogan’s view was still the conventional wisdom. As of Friday afternoon federal funds futures traders estimated a 70% chance the Fed will maintain rates at its June 13-14 meeting, down from 80% on Thursday, according to CME Group.

U.S. stock indexes were higher, on similar thinking about the Fed and as investors cheered a budget deal in Washington, D.C. that averted a debt default. Treasury yields were also pressed higher when Fitch Ratings said just after noon that the U.S.’ “AAA” credit rating would remain on negative watch, despite the debt agreement.

With the debt ceiling extended for another two years, U.S. one-month Treasury bills tumbled nearly 36 basis points this week, the largest weekly drop since roughly the third week of April.

The 10-year yield was down 13 basis points this week, on track for its largest weekly decline since mid-March.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes (US2US10=RR), seen as an indicator of economic expectations, was last at -81.2 basis points.

The 10-year TIPS breakeven rate (US10YTIP=RR) was last at 2.197%, indicating the market sees annual inflation averaging at that level for the next decade.

The U.S. dollar 5 years forward inflation-linked swap (USIL5YF5Y=R), seen by some as a better gauge of inflation expectations due to possible distortions caused by the Fed’s quantitative easing, was last at 2.490%.