Treasuries Close Firmly In The Red Amid Fed Worries

(RTTNews) - Treasuries saw considerable weakness during trading on Wednesday, as upbeat employment data added to recent concerns about the outlook for the Federal Reserve's asset purchase program.

Bond prices came under pressure in early trading and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 6.6 basis points to 2.841 percent.

With the increase on the day, the ten-year yield offset the modest loss posted on Tuesday to reach its highest closing level in over two months.

The weakness among treasuries came following the release of a report from payroll processor ADP released showing stronger than expected private sector job growth in the month of November.

ADP said the private sector added 215,000 jobs in November following an upwardly revised increase of 184,000 jobs in October. Economists had expected private sector employment to increase by about 170,000 jobs.

The strong private sector job growth increased the focus on Friday's monthly jobs report from the Labor Department, which could have a significant impact on the outlook for the Fed's stimulus program.

A separate report from the Commerce Department showed a substantial increase in new home sales in the month of October, with the increase in sales more than offsetting the decrease seen in September.

The report said new home sales jumped 25.4 percent to a seasonally adjusted annual rate of 444,000 in October after sliding 6.6 percent to 354,000 in September. Economists had expected new home sales to come in at a rate of 425,000.

The Commerce Department released the data for both October and September on the same day as a result of the recent government shutdown.

Meanwhile, the Institute for Supply Management also released a report showing an unexpected decrease by its reading on activity in the service sector.

The ISM said its non-manufacturing index fell to 53.9 in November from 55.4 in October, hitting its lowest level since June.

A reading above 50 indicates continued growth in the service sector, but economists had expected the index to inch up to a reading of 55.5.

Economic data may continue to attract attention on Thursday, with reports on third quarter GDP, weekly jobless claims, and factory orders scheduled to be released.

Nonetheless, trading activity may be somewhat subdued as traders look ahead t the release of the monthly jobs report on Friday.