NEW YORK - U.S. Treasury yields rose to two-week highs on Friday after data showed the world's largest economy created more jobs than expected last month, putting the Federal Reserve on track to raise interest rates by half a percentage point a few more times this year. U.S. yields from one-year notes to 30-year bonds all climbed to two-week peaks in the wake of the better-than-expected nonfarm payrolls report.

Data showed U.S. nonfarm payrolls increased by 390,000 jobs in May. The numbers for April were revised higher to show payrolls rising by 436,000 jobs instead of 428,000 as previously estimated. Economists polled by Reuters had forecast payrolls increasing by 325,000 jobs last month. Estimates ranged from as low as 250,000 jobs added to as high as 477,000.

"Overall this is a solid report, the Fed decision was already a done deal so it is not like this is really going to matter for that," said Shawn Cruz, head trading strategist, at TD Ameritrade in Chicago. "This was more about what does this tell us about underlying demand, the economy's ability to handle everything going on and are we going to see leveling off in any major sector in a big way. But we didn't really see any of this, there was leisure and hospitality was up, professional and business services, transportation and warehousing, so this was a good report that shows the general populace is going back into the labor force."

The yield curve steepened with the spread between U.S. two-year and 10-year yields widening to 29.8 basis points. In early morning trading, the U.S. benchmark 10-year yield rose 6.6 bps to 2.9772%, after earlier hitting a two-week high of 2.981%.

U.S. 30-year yields were up 7.6 bps at 3.1512%. Earlier, they touched a two-week peak of 3.156%. On the short end of the curve, U.S. two-year yields, which tend to be sensitive to U.S. rate move expectations, gained 4.3 bps to 2.6831%, after advancing to a two-week high earlier in the session.

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Chuck Mikolajczak; Editing by Kirsten Donovan)