Treasuries Pull Back Amid Reports Of Progress In U.S.-China Trade Talks

(RTTNews) - Following the modest rebound in the previous session, treasuries moved back to the downside during the trading day on Wednesday.

Bond prices moved lower early in the session and remained in negative territory throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.6 basis points to 2.517 percent.

The pullback by treasuries came amid optimism about the latest round of trade talks between U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

Ahead of the meetings, people briefed on the trade talks told the Financial Times top U.S. and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute.

Officials are still haggling over how to implement and enforce the agreement, however, with Myron Brilliant, executive vice-president for international affairs at the U.S. Chamber of Commerce, telling reporters the last 10 percent is the "hardest part."

The Financial Times said the two sides remain apart on two key issues: the fate of existing U.S. tariffs on Chinese goods and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal.

Meanwhile, traders largely shrugged off a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of March.

ADP said private sector employment rose by 129,000 jobs in March after jumping by an upwardly revised 197,000 jobs in February.

Economists had expected employment to increase by 170,000 jobs compared to the addition of 183,000 jobs originally reported for the previous month.

"The job market is weakening, with employment gains slowing significantly across most industries and company sizes," said Mark Zandi, chief economist of Moody's Analytics.

"Businesses are hiring cautiously as the economy is struggling with fading fiscal stimulus, the trade uncertainty, and the lagged impact of Fed tightening," he added. "If employment growth weakens much further, unemployment will begin to rise."

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs,

Employment is expected to jump by 180,000 jobs in March after inching up by just 20,000 jobs in February, while the unemployment rate is expected to hold at 3.8 percent.

A separate report from the Institute for Supply Management showed service sector growth in the U.S. cooled off in March after a significant acceleration in the previous month.

The ISM said its non-manufacturing index slid to 56.1 in March after jumping to 59.7 in February, although reading above 50 still indicates growth in the service sector.

Economists had expected the index to show a more modest pullback, with forecasts calling for the index to dip to 58.0.

A report on weekly jobless claims may attract some attention on Thursday, although traders may be reluctant to make significant moves ahead of the release of the more closely watched monthly jobs report on Friday.