Ten-Year Yield Surges Above 4.0% For First Time In Four Months

(RTTNews) - After moving sharply lower over the course of the previous session, treasuries showed another substantial move to the downside during trading on Thursday.

Bond prices regained some ground after a steep drop in morning trading but remained firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 9.6 basis points to 4.041 percent.

The ten-year yield added to the 8.7 basis points jump seen on Wednesday to close above 4.0 percent for the first time in four months.

The extended sell-off by treasuries came as a batch of largely upbeat U.S. economic data added to concerns about the outlook for interest rates following Wednesday's hawkish Federal Reserve minutes.

Before the start of trading, payroll processor ADP released a report showing much stronger than expected private sector job growth in the month of June.

ADP said private sector employment spiked by 497,000 jobs in June after jumping by a downwardly revised 267,000 jobs in May.

Economists had expected private sector employment to increase by 228,000 jobs compared to the addition of 278,000 jobs originally reported for the previous month.

While the surge in private sector employment paints a positive picture of the economy, continued strength in the labor market may convince the Federal Reserve to resume raising interest rates.

The Fed, which is due to announce its next interest rate decision later this month, has previously warned about the impact of labor market tightness.

The Institute for Supply Management also released a report showing the pace of growth in the service sector accelerated by much more than expected in June.

The ISM said its services PMI climbed to 53.9 in June from 50.3 in May, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 51.0.

Trading on Friday is likely to be driven by reaction to the Labor Department's closely watched monthly jobs report, which could further impact the outlook for interest rates.