Upbeat Jobs Data Leads To Continued Weakness Among Treasuries

(RTTNews) - Treasuries moved sharply lower over the course of the trading day on Wednesday, extending the pullback seen over the course of the previous session.

Bond prices came under pressure in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.5 basis points to 2.628 percent.

With the increase on the day, the ten-year yield added to the 4.7 basis point gain posted in the previous session, climbing further off the nearly one-month closing low set on Monday.

The continued weakness among treasuries was largely due to the release of a report from payroll processor ADP showing that private sector employment in the U.S. increased by much more than anticipated in the month of June.

ADP said employment in the private sector surged up by 281,000 jobs in June following an increase of 179,000 jobs in May. Economists had been expecting employment to climb by about 205,000 jobs.

The substantial private sector job growth in June reflected the biggest monthly increase in employment since November of 2012.

Mark Zandi, chief economist of Moody's Analytics, said, "Judging from the job market, the economic recovery remains fully intact and is gaining momentum."

The ADP report led to optimism about the Labor Department's monthly jobs report, which is due to be released Thursday morning.

The Labor Department report includes both public and private sector jobs and is currently expected to show an increase of about 210,000 jobs.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "Overall, an increase in official payrolls by at least 200,000 in June would probably be enough to reduce the unemployment rate to 6.2%, from 6.3% in May."

"Given the recent volatility of the GDP data, the strength of the labor market will play a greater role in the Fed's thinking," he added.

While the jobs report is likely to be in focus on Thursday, several other economic reports are also scheduled to be released, including reports on weekly jobless claims, international trade, and service sector activity.