Treasuries Close Notably Lower On Upbeat Jobs Data

(RTTNews) - After trending higher over the past few sessions, treasuries showed a notable move back to the downside during trading on Wednesday.

Bond prices came under pressure in early trading and remained stuck firmly in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 5.6 basis points to 2.993 percent.

The ten-year yield partly offset the losses posted in recent sessions but remains below the two-year closing high set on New Year's Eve.

Upbeat jobs data contributed to the pullback by treasuries, as a report from payroll processor ADP showed that private sector employment increased by more than expected in the month of December.

ADP said the private sector added 238,000 jobs in December following an upwardly revised increase of 229,000 jobs in November.

Economists had expected an increase of about 200,000 jobs compared to the addition of 215,000 jobs originally reported for the previous month.

The stronger than expected private sector job growth generated some optimism about the Friday's monthly jobs report from the Labor Department.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Bottom line, this was the 3rd straight month of 200k+ of gains and if confirmed by Friday's payroll report, it provides the Fed the proper reason to continue its paring of asset purchases at each of the upcoming meetings."

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $21 billion worth of ten-year notes, which attracted average demand.

The ten-year note auction drew a high yield of 3.009 percent and a bid-to-cover ratio of 2.68, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.70.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Meanwhile, traders largely shrugged off the minutes of the Federal Reserve's December meeting, as the minutes did not provide much new information about the central bank's decision to scale back stimulus.

While a report on weekly jobless claims and an auction of thirty-year bonds may attract some attention on Thursday, trading activity is likely to be somewhat subdued ahead of Friday's monthly jobs report.