Optimism About Greece Leads To Sharp Pullback By Treasuries

(RTTNews) - After ending the previous session roughly flat, treasuries saw considerable weakness throughout the trading day on Wednesday.

Bond prices came under pressure in early trading and remained firmly in the red for the rest of the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.3 basis points to 2.418 percent.

The initial pullback by treasuries came as the latest developments regarding the Greek debt crisis led to some optimism about a potential deal.

While Greece failed to make a 1.55 billion euro payment to the International Monetary Fund, Greek Prime Minister Alexis Tsipras sent a letter indicating he will accept most of the demands made by the country's creditors.

The two-page letter, obtained by the Financial Times, was sent to the heads of the IMF, the European Commission, and the European Central Bank.

However, German Chancellor Angela Merkel and Eurogroup President Jeroen Dijsselbloem have both said further negotiations will have to wait until after the Greek referendum on Sunday.

Tsipras has called on Greeks to vote "no" in the referendum, which he claimed is not an up or down vote on Greece's membership in the eurozone.

The Greek Prime Minister argued that voting against the proposals offered by creditors would give the government more leverage in the negotiations.

The weakness among treasuries also came amid the release of some upbeat U.S. economic data, including a report from payroll processor ADP showing private sector employment increased by more than expected in the month of June.

ADP said employment in the private sector jumped by 237,000 jobs in June following an upwardly revised increase of 203,000 jobs in May. Economists had expected an increase of about 220,000 jobs.

Additionally, the Institute for Supply Management released a report showing that its manufacturing index rose by slightly more than expected in June.

The ISM said its purchasing managers index rose to 53.5 in June from 52.8 in May, with a reading above 50 indicating an increase in manufacturing activity. Economists had expected the index to edge up to 53.2.

News regarding Greece is likely to remain in focus on Thursday, but traders are also likely to keep a close eye on the Labor Department's monthly jobs report. The report is being released a day earlier than usual due to the July 4th holiday.

Economists currently expect the report to show an increase of about 230,000 jobs in June following the jump of 280,000 jobs reported for May. The unemployment rate is also expected to dip to 5.4 percent.