On Wednesday, Treasury bonds saw a significant rise, continuing the upward trend observed over the last two sessions. Bond prices surged early in the day and remained strong throughout. Consequently, the yield on the key ten-year note dipped 9.2 basis points to 3.967 percent.
This marks the fourth time in the past five trading sessions that the ten-year yield has closed lower. It ended the day at its lowest point in more than two weeks. Treasuries experienced an early boost following a report released by payroll processor ADP showing that private sector job growth in the U.S slowed more than expected in January.
According to ADP's report, there was an increase of 107,000 jobs in the private sector in January, a significant drop from December's upwardly revised figure of 158,000 jobs. Economists had anticipated a job increase of 145,000, compared to a previous report of 164,000 added jobs.
On a year-on-year basis, the pay growth for consistent employees slowed to 5.2 percent in January, down from 5.4 percent in December. For those changing jobs, the annual pay increase was 7.2 percent, the smallest annual gain since May 2021.
Following the Federal Reserve's monetary policy announcement, there was an initial drop in Treasuries, but they quickly regained their ground. As expected, the Fed maintained the target range for the federal funds rate at 5.25 to 5.50 percent, as part of its dual goals of achieving maximum employment and an inflation rate of 2 percent over the long term.
Although the Fed acknowledged that inflation has lessened over the past year, it emphasized that it remains high. The central bank portrayed economic growth as robust, noting that while job gains have been slower than early last year, they are still strong.
The bank's statement removed any mention of potential additional policy tightening. However, it was highlighted that the Fed does not anticipate reducing rates until there is greater certainty that inflation is on a stable path toward 2 percent.
Thursday's trading may be influenced by responses to the Fed's decisions, along with reports on weekly jobless claims, manufacturing activity, and construction spending.
