The U.S. added just 69,000 new jobs in May while the unemployment rate grew to 8.2 percent, fueling speculation that the Fed might be prompted to intervene with another round of quantitative easing. Economists polled by Reuters had expected nonfarm payrolls to increase 150,000 and the jobless rate to hold steady at 8.1 percent.

"It's painfully obvious the economic recovery in the U.S. isn't just slowing down, it's pulling up the emergency brake," said Todd Schoenberger, managing principal The BlackBay Group.

Also on the economic front, construction spending rose a less-than-expected 0.3 percent and the Institute for Supply Management's manufacturing index also came in light at 53.5—still in expansion territory but reflective of a slowdown.

"We think it is increasingly likely the Fed will announce another round of QE at the Aug. 1 or Sept. 13 meeting," Michelle Meyer, senior economist at Bank of America Merrill Lynch, told clients in a note. "The Fed will not sit idle as the economy slows." (Read More: Why More Fed Easing Might Not Help Much Now )

Bond yields found new historic depths , with the 10-year Treasury note yield dropping below 1.5 percent and the 30-year bond touching its all-time low, while energy prices hit three-year lows as well and metals including gold surged.