Treasuries Recover From Early Weakness, Close Firmly Positive

(RTTNews) - After coming under pressure early in the session, treasuries showed a significant turnaround over the course of the trading day on Wednesday.

Bond prices climbed well off their early lows and firmly into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 4.3 basis points to 4.180 percent after reaching a high of 4.281 percent.

The rebound by treasuries came amid optimism about the outlook for interest rates following the release of some weaker than expected U.S. economic data.

Payroll processor ADP released a report this morning showing private sector employment in the U.S. increased by slightly less than expected in the month of November.

ADP said private sector employment climbed by 146,000 jobs in November after jumping by a downwardly revised 184,000 jobs in October.

Economists had expected private sector employment to grow by 165,000 jobs compared to the surge of 233,000 jobs originally reported for the previous month.

A separate report released by the Institute for Supply Management showed U.S. service sector growth slowed by more than anticipated in the month of November.

The ISM said its services PMI fell to 52.1 in November from 56.0 in October. While a reading above 50 still indicates growth, economists had expected the index to show a much more modest decrease to 55.5.

Following the data, CME Group's FedWatch Tool is indicating a 75.5 percent chance the Federal Reserve will lower interest rates by 25 basis points later this month.

During remarks later in the afternoon, Fed Chair Jerome Powell reiterated the central bank will take a cautious approach to cutting rates due to the continued strength of the economy.

A report on weekly jobless claims may attract attention on Thursday, although activity may be somewhat subdued ahead of the release of the more closely watched monthly jobs report on Friday.