US bond traders are focused on the July employment report for evidence of whether labor-market resilience will support or undermine expectations for a Federal Reserve interest-rate increase later this year. Economists project nonfarm payrolls increased by roughly 80,000 last month, following a downwardly revised 57,000 gain in June. The unemployment rate is expected to remain unchanged at 4.2 percent.

Treasury yields held steady in early Friday trading, with the 10-year note around 4.67 percent. Shorter-maturity yields have been particularly sensitive to shifts in policy expectations under Fed Chair Kevin Warsh, whose committee has kept the target range steady for consecutive meetings. Market pricing currently embeds limited odds of a September rate hike, with fed-funds futures reflecting roughly 14 basis points of tightening.

While a firm payrolls number could tip the scale toward a hike, several metrics point to structural cooling. Economists note that monthly payroll increases in the 50,000 range may now suffice to hold the jobless rate steady. The report follows a period where weaker payrolls and declining oil prices had pulled back hike bets.