Treasury prices turned lower Wednesday, reversing earlier gains, as U.S. equities moved higher and the Federal Reserve bought $6 billion in U.S. securities.
Ten-year note yields , which move in the opposite direction of prices, rose 1 basis point to 2.68%, following Tuesday's gains. A basis point is 0.01%.
Two-year note yields were little changed at 0.81%.
Stocks opened lower but but moved into positive territory at midmorning and then extended their gains, with the Standard & Poor's 500 Index up 0.4%.
Bond traders find themselves dealing with a "choppy environment," John Spinello, Treasury strategist at Jefferies & Co., said in emailed comments.
He cited "two-way activity" in Treasurys as driven by the action in stocks as well as what policy announcements from the Group of 20 meeting in London would say. See more on G20 summit.
Treasurys advanced in early trading after a survey based on a sampling of ADP payrolls said private companies slashed 742,000 jobs in March, raising concerns that Friday's government job report will show an even bigger-than-expected drop in U.S. nonfarm payrolls. See more on ADP jobs report.
Economists expect the Labor Department is expected to say that payrolls dropped by 663,000 in March and that the nation's unemployment rate jumped to 8.5%.
Fed purchases
Treasurys also played off the Federal Reserve's latest foray into the government bond market, buying $6 billion in debt maturing in 2012 and 2013. Dealers had submitted $16.95 billion in debt to be purchased. See details of purchases on Fed's Web site.
On Monday, the central bank bought $2.5 billion in bonds maturing in 17 to 30 years. That followed $15 billion in shorter-dated debt bought last week to kick off a plan to buy $300 billion in U.S. debt, a program designed to force borrowing costs lower.
The Fed's next batch of purchases, of debt maturing between 2013 and 2016, will take place on Thursday.
The range of securities the Fed is willing to buy excluded the most recently issued 3-year note , which was expected to mean the Fed would buy less than last week's two buybacks, said George Goncalves, chief Treasury and agency-debt strategist at Morgan Stanley. See previous story on Fed buybacks.
Treasurys felt pressure after a report showed a slight improvement in the U.S. manufacturing sector, though it contracted for the 14th consecutive month in March.
The Institute for Supply Management's industrial index rose to 36.3% in March, up from 35.8% the previous month. See more on ISM data.
Economists surveyed by MarketWatch expected the index to read 36%. Readings under 50% indicate more firms say business is getting worse than say it's getting better.
A separate report showed pending home sales rose 2.1% in February, while many expected no change from the previous month.
In the first quarter ended Tuesday, Treasurys of all maturities lost 1.43%, according to an index compiled by Merrill Lynch, retracing some of the steep gains at the end of 2008 as investors clamored for the relative safety of U.S. debt.
The rising price tag of government plans to stimulate economic activity and defrost credit markets also weighed, as investors are wary that more debt issuance will reduce the value of their current holdings.
