After moving notably higher over the two previous sessions, treasuries gave back ground in early trading on Wednesday but finished the day only slightly lower.
Bond prices recovered from their early drop and showed a lack of direction for the rest of the session before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.060 percent.
With the slight uptick on the day, the ten-year yield regained some ground after ending the previous session at its lowest closing level in a month.
The initial weakness among treasuries was partly due to profit taking following the strength seen in the two previous sessions.
A rally on Wall Street also weighed on treasuries, with U.S. stocks moving higher amid considerable strength in the overseas markets.
Traders were also reacting to a report from payroll processor ADP showing stronger than expected private sector job growth in the month of September.
The report said private sector employment jumped by 200,000 jobs in September following a downwardly revised increase of 186,000 jobs in August. Economists had expected an increase of about 190,000 jobs.
“Businesses with more than 1,000 employees contributed over half of the job gains in September, despite weakness in energy and manufacturing,” said Ahu Yildirmaz, VP and head of the ADP Research Institute.
She added, “The largest companies appear to be starting to overcome the impacts of weak global demand and the high dollar, while the smallest companies may have pulled back as concerns about the resiliency of the U.S. economy grew and consumer confidence softened.”
Friday morning, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.
Meanwhile, a separate report from MNI Indicators showing an unexpected contraction in Chicago-area business activity in September helped to offset some of the early selling pressure.
MNI Indicators said its Chicago business barometer tumbled to 48.7 in September from 54.4 in August, with a reading below 50 indicating a contraction.
Economists had been expecting the business barometer to show a much more modest decrease to a reading of 53.6, which would have still indicated growth.
Trading on Thursday may be impacted by another batch of U.S. economic data, including reports on weekly jobless claims, manufacturing activity, and construction spending.
The material has been provided by InstaForex Company – www.instaforex.com