Treasuries Close Little Changed Following Yesterday's Rally

(RTTNews) - Following the rally seen in the previous session, treasuries saw modest strength for much of the trading day on Wednesday before closing little changed.

Bond prices moved to the upside in early trading but pulled back near the unchanged line going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.118 percent.

The modest strength seen for most of the day came following the release of a report from payroll processor ADP showing a notable slowdown in the pace of private sector job growth in the month of August.

ADP said private sector employment climbed by 177,000 jobs in August after surging by an upwardly revised 371,000 jobs in July.

Economists had expected private sector employment to advance by 195,000 jobs compared to the jump of 324,000 jobs originally reported for the previous month.

The slightly smaller than expected increase in private sector employment added to recent optimism about the outlook for interest rates.

"While the ADP report does not necessarily enjoy an exceptionally strong positive correlation with the government's payroll report due on Friday morning, it nonetheless suggests that the overheated jobs market may be cooling---- clearly what the Fed wants to see, as it should bring the labor market into balance," said Quincy Krosby, Chief Global Strategist for LPL Financial.

Separately, revised data released by the Commerce Department showed the U.S. economy grew by less than previously estimated in the second quarter.

The report said the increase in gross domestic product in the second quarter was downwardly revised to 2.1 percent from the previously reported 2.4 percent. Economists had expected the pace of GDP growth to be unrevised.

Buying interest was somewhat subdued, however, as traders looked ahead to the release of some key economic data in the coming days.

A Commerce Department report on personal income and spending is likely to be in focus on Thursday, as it includes a reading on inflation said to be preferred by the Federal Reserve.