Treasuries Extend Recent Sell-Off Following Economic Data

(RTTNews) - Treasuries moved sharply lower during trading on Wednesday, extending the sell-off seen over the two previous sessions.

Bond prices came under pressure in morning trading and remained firmly in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10 basis points to 2.366 percent.

With the increase on the day, the ten-year yield added to the sharp increases seen in the two previous sessions, reaching its highest closing level since November of 2014.

The continued weakness among treasuries came following the release of a slew of U.S. economic data, including a report from payroll processor ADP showing a notable re-acceleration in the pace of private sector job growth in the month of May.

ADP said the private sector added 201,000 jobs in May following a downwardly revised increase of 165,000 jobs in April. Economists had expected an increase of about 200,000 jobs.

"The labor market moved back up to the 200,000 jobs added mark in May, a number which has been something of a bellwether for healthy employment growth," said Carlos Rodriguez, president and chief executive officer of ADP.

He added, "We hope that the May number is the beginning of an upward trend going into the summer months."

The Commerce Department also released a report showing that the U.S. trade deficit narrowed by more than expected in the month of April.

The report said the trade deficit narrowed to $40.9 billion in April from a revised $50.6 billion in March, while economists had expected the deficit to drop to $44.0 billion.

Meanwhile, the Institute for Supply Management released a report showing that its index of activity in the service sector fell by more than expected in May.

The ISM said its non-manufacturing index dropped to 55.7 in May from 57.8 in April. A reading above 50 indicates continued growth in the service sector, but economists had expected the index to show a much more modest drop to a reading of 57.2.

While the index fell to its lowest level since April of 2014, analysts suggested the data continues to point to significant strength in the service strength.

Reports on weekly jobless claims and labor productivity may attract some attention on Thursday, although traders are likely to be looking ahead to Friday's more closely watched monthly jobs report.