Treasuries Close Nearly Flat For Second Straight Day

(RTTNews) - After ending the previous session roughly flat, treasuries continued to show a lack of direction throughout the trading day on Wednesday.

Bond prices eventually closed near the unchanged line for the second straight day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.568 percent.

The lackluster performance by treasuries came as traders continued to look ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.

The strength of the jobs data is likely to have a significant impact on expectations regarding whether the Federal Reserve will raise interest rates at its next meeting.

Fed Chair Janet Yellen said last Friday she believes the case for raising rates has strengthened in recent months, although she stressed that policy decisions always depend on the degree to which incoming data continues to confirm the central bank's outlook.

Payroll processor ADP released a report this morning showing that private sector employment increased roughly in line with economist estimates in the month of August.

ADP said the private sector added 177,000 jobs in August following an upwardly revised increase of 194,000 jobs in July. Economists had expected employment to climb by about 175,000 jobs.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "If the ADP turns out to be off the mark and non-farm payrolls increase by 250,000 or more, as they did in both June and July, then a September rate hike would become a real possibility."

"It is more likely that payrolls will come in below 200,000, however, which would probably persuade the Fed to hold off on the next rate hike until December," he added.

The Labor Department report is expected to show an increase of about 175,000 jobs in August following the jump of 255,000 jobs in July.

A separate report from the National Association of Home Builders showed a much bigger than expected increase in pending home sales in the month of July.

The report said the pending home sales index jumped by 1.3 percent to 111.3 in July from a downwardly revised 109.9 in June. Economists had expected the index to climb by 0.6 percent.

Reports on jobless claims, labor productivity, manufacturing activity and construction spending may attract attention on Thursday, although activity may remain subdued as the jobs report looms.