10-year Treasury yield edges higher while U.S. private-sector payrolls fall short of expectations

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U.S. Treasury yields rose slightly in early Wednesday trade even though a reading of private-sector payrolls fell short of elevated expectations among analysts.

What are Treasurys doing?

The 10-year Treasury note yield
TMUBMUSD10Y,
1.605%
was up 1.5 basis points to 1.606%. The 2-year note
TMUBMUSD02Y,
0.164%
was steady at 0.161%, while the 30-year bond yield
TMUBMUSD30Y,
2.285%
rose 1.6 basis point to 2.280%.

What’s driving Treasurys?

Government bonds were on the backfoot as Automatic Data Processing Inc. reported the private sector had gained 742,000 jobs in April, below forecasts for 800,000 according to Dow Jones data.

The weaker-than-expected number could weigh on hopes that the government’s nonfarm payrolls data due on Friday could see about a million new jobs created for the month which might prompt the Federal Reserve towards a discussion of tapering its asset purchases.

In other U.S. data, a services sector activity indicator for April from the Institute for Supply Management is due at 10 a.m. ET.

Investors will keep their eye on any further Fed commentary after Treasury Secretary Janet Yellen raised the possibility of interest-rate increases if the economy overheated, in relation to President Joe Biden’s plans for further fiscal spending.

What did market participants say?

“ADP numbers are more important than usual this month because there have been some bets on a weaker than expected payroll report on Friday,” said Jim Vogel, an interst-rate strategist at FHN Financial.



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