By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices reversed a decline on Thursday, leaving 10-year yields near 2%, as traders balance relatively good economic data in the U.S. with renewed fears about European banks and Greece’s debt problems.
Bond prices, which move inversely to yields, briefly turned down after ADP said U.S. private employers added considerably more jobs than expected last month, but traders took the data with a grain of salt.
Yields on 10-year notes 10_YEAR -1.41% declined 2 basis points to 1.96%, after touching 2.03% following the data. A basis point is one one-hundredth of a percentage point.
Thirty-year bond yields 30_YEAR -0.89% slid 2 basis points to 3.01%.
Yields on 2-year notes 2_YEAR -1.50% fell 1 basis point to 0.26%.
While the day’s data matters, “it’s the future investors worry about and the widening fractures in the European debt markets,” said Bill O’Donnell, head of Treasury strategy at RBS Securities.
Data based on a sampling of ADP payroll reports showed the private sector adding an estimated 325,000 jobs in December, more than the 178,000 that had been forecast, according to RBC Capital Markets. Read about ADP data.
Analysts noted that it’s notoriously hard to accurately gauge year-end economic data and that last December, ADP’s numbers were quite far from the government’s broader nonfarm payrolls data for the month. The Labor Department releases its December unemployment report on Friday.
“Nonetheless, this report adds to the list of more encouraging indications on the labor market,” said economists at RDQ Economics.
Just after that, markets registered little reaction to a government report showing initial jobless claims fell to 372,000 last week, close to what economists expected. See story on jobless claims.
“Signs about the labor market in the U.S. are relatively perky,” O’Donnell said.
Bonds gained some ground after the Institute for Supply Management’s index on the non-manufacturing sector for December came in a little shy of economists’ expectations.
On Friday, the Labor Department is expected to say overall nonfarm payrolls increased 150,000 in December, compared with 120,000 in November, according to a survey of economists by MarketWatch.
“Once we pass that tomorrow, the focus will shift back to what will happen to the ratings of key European countries like France, what’s the disposition of Hungary and Greece’s next big debt redemption” coming up, O’Donnell said. “There’s always something out there in the future we have to fear and therefore the safest place to be is in Treasurys.” Read about Europe, Hungary in Currencies.
Still to come is the Treasury Department’s announcement of how much in debt it will auction next week.
Treasury yields are seen flitting within a relatively narrow range as continued worries about European sovereign debt and the banking sector maintain demand for the relative safety of U.S. debt, while the outlook for the largest global economy makes further improvement. Read about Treasury activity Wednesday.
