The unemployment rate unexpectedly declined to 7.7 percent, the lowest since December 2008, from 7.9 percent as the economy added 236,000 jobs in February, the Labor Department said March 8. It’s still above the Fed’s target of less than 6.5 percent. The median forecast of economists in a Bloomberg News survey was for an increase of 165,000. Average hourly earnings rose 0.2 percent to $23.82.

Real yields have begun to reward investors, recovering from negative levels as recently as November, even though the gap between the Fed’s inflation measure and the benchmark 10-year note is still below its 10-year average of 1.38 percent.

Another measure of the relative value of U.S bonds with maturities of more than 10 years shows them yielding 0.44 percentage point more than comparable global sovereign debt. That makes the securities the cheapest since August 2011, according to Bank of America Merrill Lynch indexes.

Treasuries have also gotten less expensive according to the term premium, a model created by the Fed that includes expectations for interest rates, growth and inflation. With a 30-day moving average of negative 0.65 percent, the measure shows 10-year notes are the cheapest since May, after they were the costliest ever in December.

While the U.S. is exhibiting slow growth, expected to grow at a 1.8 percent this year, other developed countries have it worse as the euro-area economy, still grappling with the effects of a debt crisis, may shrink by 0.1 percent this year, surveys of economists by Bloomberg show. The U.S. is also expected to fare better than the average of 1.15 percent growth expected in the Group of 10 developed nations.

There is “a long road ahead of these low rates,” Jay Mueller, who manages about $3 billion of bonds at Wells Fargo Capital Management in Milwaukee, said in a telephone interview March 5. “It’s easy to look at the U.S. and see all of these problems, until you look around the world and see everybody has these problems and more. As a consequence, you are seeing dollar-denominated assets do well, and that includes Treasuries.”

Fed Purchases

Consumer prices will rise 1.8 percent this year, according to a Bloomberg survey of economists. A bond market measure used by the Fed to forecast inflation for the five years starting in 2018 has fallen to 2.83 percent from a high this year of 2.89 percent on Jan. 29, and is about the average for this gauge over the past decade.

Yields are also being held down by Fed purchases of $85 billion a month in Treasuries and mortgage bonds aimed at boosting growth and demand for the safest assets amid a dwindling supply.

Investors submitted $3.05 in bids for each dollar of the $360 billion auctioned by the Treasury this year, second only to last year’s ratio of $3.15.