Benchmark bonds take a break in longest rally since August
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices erased losses on Wednesday, keeping 10-year yields at their lowest since October, after ADP said private U.S. employers added 170,000 jobs in January.
Yields on 10-year notes 10_YEAR +2.50% , which move inversely to prices, traded at 1.81%, erasing a rise that took yields to 1.83% before the data. A basis point is one one-hundredth of a percentage point.
The benchmark security’s yield fell for the past six sessions, the longest streak since August.
Five-year yields 5_YEAR +3.39% increased 1 basis point to 0.72%, after closing Tuesday at their lowest level of all time.
Yields on 2-year notes 2_YEAR +1.77% hovered at 0.22% and 30-year bond yields 30_YEAR +1.87% at 2.95%.
ADP’s data on private payrolls came in a little shy of what some economists expected, but markets may shrug it off because the data series hasn’t been a very precise predictor of the Labor Department’s overall monthly employment report, which is released Friday. Read story on ADP.
“We cover the ADP release because we have to, but it is always with an eye of suspicion,” said Eric Green, chief market economist at TD Securities. The firm’s forecast for nonfarm payrolls “does not change with this release and I suspect nobody on Wall Street will change theirs either. So, in effect, ADP is lower than expected but essentially on the screws for Friday.”
Still to come is ISM’s report on the health of the manufacturing sector.
Treasury bonds gained on Tuesday after a trio of U.S. economic reports came in worse than many economists expected. The main thrust for the month, however, was progress — or lack thereof — in Europe towards containing and resolving its sovereign debt crisis. Read about Treasury rally on Tuesday.
Still, Greece and its creditors have not agreed on a deal to cut the country’s debt burden and avoid a default next month.
