Treasuries Extend Downward Trend After Upbeat Jobs Data

(RTTNews) - Extending the downward trend seen over the past several sessions, treasuries moved to the downside during trading on Wednesday.

After coming under pressure early in the session, bond prices regained some ground but remained in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.1 basis points to 2.552 percent.

With the increase on the day, the ten-year yield climbed to its highest closing level in well over two months.

The weakness among treasuries came as a report from payroll processor ADP showing a sharp jump in private sector employment in the month of February added to expectations the Federal Reserve will raise interest rates next week.

ADP said private sector employment surged up by 298,000 jobs in February after jumping by an upwardly revised 261,000 jobs in January.

Economists had expected employment to climb by about 190,000 jobs compared to the addition of 246,000 jobs originally reported for the previous month.

The spike in private sector employment in February marked the biggest monthly increase since January of 2006.

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

The report is expected to show that employment increased by about 195,000 jobs in February after jumping by 227,000 jobs in January. The unemployment rate is expected to dip to 4.7 percent from 4.8 percent.

Treasuries regained some ground following the release of the results of the Treasury Department's auction of $20 billion worth of ten-year notes, which attracted above average demand.

The ten-year note auction drew a high yield of 2.560 percent and a bid-to-cover ratio of 2.66, while the ten previous ten-year note auctions had an average bid-to-cover ratio of 2.45.

The European Central Bank's monetary policy announcement may attract attention on Thursday along with U.S. reports on weekly jobless claims and import and exports prices.

Bond traders are also likely to keep an eye on the results of the Treasury's auction of $12 billion worth of thirty-year bonds.

Nonetheless, trading activity is likely to remain relatively subdued ahead of the release of the monthly jobs report on Friday.