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Treasuries Move Back To The Upside On Disappointing Jobs Data

5/2/2012 3:52 PM ET

After coming under pressure in the previous session, treasuries moved back to the upside on Wednesday on the heels of the release of a disappointing jobs report.

Bond prices moved sharply higher in early trading but gave back some ground as the day progressed and closed well off their highs. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 1.922 percent after hitting a low of 1.90 percent.

The strength among treasuries came following the release of a report from payroll processor Automatic Data Processing (ADP) showing weaker than expected private sector job growth in the month of April.

ADP said that private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 201,000 jobs in March. Economists had expected an increase of about 183,000 jobs compared to the addition of 209,000 jobs originally reported for the previous month.

"While April's increase was the twenty-seventh consecutive monthly advance, it nonetheless reflected a deceleration in the recent pace of hiring," Joel Prakken, Chairman of Macroeconomic Advisers, LLC, said in a statement.

The data raised some concerns about Friday's more closely watched monthly employment report from the Labor Department, which includes government jobs.

A separate report from the Commerce Department showed that new orders for manufactured goods fell by 1.5 percent in March following a 1.1 percent increase in February. Orders had been expected to decrease by about 1.6 percent.

Meanwhile, the Treasury Department announced the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to sell $32 billion worth of three-year notes next Tuesday, $24 billion worth of ten-year notes next Wednesday, and $16 billion worth of thirty-year bonds next Thursday.

Following ADP's disappointing private sector jobs report, trading on Thursday could be impacted by the Labor Department's report on weekly jobless claims. Reports on labor productivity and costs and service sector activity may also attract some attention.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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