Treasuries Weaken Amid Better Than Expected Jobs Data
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(RTTNews) - Treasuries are showing moderate weakness in morning trading on Wednesday as traders digest better than expected employment figures from private payroll processor ADP, prompting interest in riskier investments such as stocks.
The benchmark ten-year note opened lower and is lingering near its worst levels of the day. Subsequently, the yield on the note is up to 3.192 percent, a climb of 3.5 basis points on the day.
Overall, treasuries remain under pressure, with the yield on the ten-year note hovering near its highest mark since late November.
Traders are digesting fresh jobs data from ADP that showed a decrease of 491,000 jobs for the month of April compared to a revised March decline of 708,000. The figure surprised economists, who had expected a drop of 650,000 jobs.
Although the data showed a notable improvement, the health of the labor sector continues to remain a concern, with Federal Reserve Chairman Ben Bernanke indicating on Tuesday that he expects the figure to continue to remain the weakest link in an otherwise increasingly optimistic series of economic reports.
The labor market will continue to be the focus for investors heading into the end of the week, with the Department of Labor reports on jobless claims for the week ended May 2nd due out Thursday. Analysts expect the figure to come in at 635,000, a tick up from previous week's figures of 631,000.
More figures from the Labor Department will come on Friday with the employment situation report expected to show April job losses at 620,000, easing from last month's figure of 663,000.
Meanwhile, the unemployment rate is forecasted to creep up to 8.9 percent for April from last month's reading of 8.5 percent, a 25-year high.
Later this morning, the New York arm of the Federal Reserve will continue its treasury buyback program, set to purchase long-term bonds maturing between March of 2011 and April of 2012. The purchase is scheduled to begin at 10:15 a.m. ET.
The last buy back took place on Monday, when the New York Fed purchased $8.50 billion worth of securities with maturity dates ranging from February of 2016 to February of 2019.
The buyback attracted strong interest, with a total of $29.05 billion in treasuries submitted for the purchase.
This afternoon, the Treasury Department will sell $22.0 billion worth of ten-year notes scheduled to mature May 15th, 2019. The auction will take place at 1 p.m. ET.
The last auction of ten-year notes took place in early April, when the Treasury Department sold $18.0 billion worth of the notes. The high yield for the sale came in at 2.950 percent, while the auction experienced stronger than usual demand, with the bid-to-cover ratio coming in at 2.49.
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