U.S. Treasury futures dropped to session lows as yields surged, following the release of January nonfarm payrolls data that exceeded expectations, with the unemployment rate falling from 4.4% to 4.3%.

The U.S. Treasury yield curve flattened in a bearish manner, with yields rising by 3 to 8 basis points across maturities. The 2s10s and 5s30s spreads narrowed by 4 basis points and 5 basis points on the day, respectively.

Overnight Indexed Swaps (OIS) tied to Federal Reserve meeting dates shifted in a hawkish direction, now pricing in approximately 50 basis points of rate cuts by year-end, compared to 59 basis points at Tuesday's close. The timing of the first fully priced rate cut was pushed back from June to July.