The payrolls data came two months before the U.S. presidential election. Employment and the economy are central themes in the campaign, with President Barack Obama and Republican challenger Mitt Romney each trying to convince voters they can best energize the expansion and create jobs.

Political Topic

"It's the No. 1 topic going into the election," said Chris Ahrens, an interest-rate strategist in Stamford, Connecticut, at UBS AG, one of the 21 primary dealers that trade with the Fed. "The sense in the market is that the central banks are on the move and are trying to be as supportive to the economic environment as possible. The bar is low for the Fed to institute another round of asset purchases."

The Fed will give "strong hints" or provide "positive action" at next week's policy meeting, Bill Gross, who runs the world's biggest bond fund at Pacific Investment Management Co. in Newport Beach, California, said in a radio interview on "Bloomberg Surveillance" with Tom Keene and Ken Prewitt. The central bank will likely ease further through "open ended" purchases of Treasuries and mortgages, he said.

The central bank's favored bond-market gauge of inflation expectations, the five-year, five-year forward break-even rate, which shows how much traders anticipate consumer prices will rise during a period of five years starting in 2017, declined to 2.43 percent on Sept. 4, the lowest level since July 26. The average for 2012 is 2.54 percent.

'Nontraditional Policies'

Treasuries climbed on Aug. 31 as Bernanke, speaking at an economics conference in Jackson Hole, Wyoming, said the costs of "nontraditional policies" to spur the economy appeared manageable when considered carefully. He said the Fed stands ready to act if necessary, stoking speculation he'll extend the time frame on the Fed's pledge to hold interest rates at virtually zero until late 2014 or restart bond purchases.

The Fed purchased $2.3 trillion of securities from 2008 to 2011 in two rounds of quantitative easing. It also has kept its benchmark rate at zero to 0.25 percent since December 2008.

"QE is a net negative for Treasuries, if it's large enough to work," said Tom Graff, who manages $3.6 billion of fixed income at Brown Advisory Inc. in Baltimore. "I don't want to be a buyer of Treasuries with QE as an expectation," though given the market reaction to today's data, "that view appears to be a minority," he said.

'Conditional' Purchases