October hiring far beats forecasts, pushing bond yields and mortgage rates higher

The Labor Department's October report showed hiring well above every major forecast, a big step up from September. Earlier months were also revised higher, and the unemployment rate slipped instead of holding steady as expected. After a year of mostly slow hiring, it is the clearest sign in months that the job market still has some strength.

Bond traders reacted quickly. Treasury yields rose after the release, reversing part of the rally that followed the midterm elections. Mortgage rates track those yields closely, so lenders are likely to price somewhat higher today than they did Thursday, when rates were at their best level since late September.

The report also feeds the debate at the Federal Reserve. Two officials already voted for a hike at the October meeting, and a strong labor market makes a cut in December less likely. Several outlets reported traders adding to bets on tighter policy. The next big test is the October inflation report later this month.