Treasuries Give Back Ground Following Strong Economic Data

(RTTNews) - Treasuries moved back to the downside during trading on Thursday following the rebound seen in the previous session.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.4 basis points to 1.625 percent.

The pullback by treasuries came as a batch of U.S. economic data reduce the appeal of safe havens such as bonds.

Early in the day, , payroll processor ADP released a report showing private sector employment in the U.S. spiked by much more than expected in the month of May.

ADP said private sector employment soared by 978,000 jobs in May after surging by a downwardly revised 654,000 jobs in April.

Economists had expected private sector employment to increase by 650,000 jobs compared to the addition of 742,000 jobs originally reported for the previous month.

A separate report from the Labor Department showed a modest decrease in first-time claims for U.S. unemployment benefits in the week ended May 29th.

The report said initial jobless claims dipped to 385,000, a decrease of 20,000 from the previous week's revised level of 405,000.

Economists had expected jobless claims to edge down to 395,000 from the 406,000 originally reported for the previous week.

With the slightly bigger than expected decrease, jobless claims once again fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The jobs data comes a day ahead of the release of the Labor Department's more closely watched report on the employment situation in the month of May.

Economists currently expect the report to show employment jumped by 664,000 jobs in May after climbing by 266,000 jobs in April. The unemployment rate is also expected to dip to 5.9 percent from 6.1 percent.

Meanwhile, the Institute for Supply Management released a report showing record growth in service sector activity in the month of May.

The ISM said its services PMI rose to 64.0 in May from 62.7 in April, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 63.0.

With the bigger than expected increase, the services PMI reached another all-time high, surpassing the previous record high of 63.7 in March.

Trading on Friday is likely to be driven by reaction to the monthly jobs report, which could have a significant impact on the outlook for monetary policy.