Treasuries experienced a significant surge on Wednesday, continuing the upward trajectory initiated in the prior session. Bond prices advanced sharply at the session's onset and maintained a solidly positive stance throughout the day. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, dropped by 9.1 basis points to 4.422 percent. This decline builds on a 3.0 basis point decrease observed on Tuesday, driving the ten-year yield to its lowest closing point in over a month.
The persistent vigor in the bond market followed remarks from the Treasury Department, which noted its current auction sizes are well-structured to accommodate potential shifts in the fiscal landscape. The Treasury indicated that, based on projected borrowing requirements, it anticipates sustaining the size of long-term securities auctions for at least the upcoming several quarters.
Treasuries' rise was also influenced by traders evaluating mixed U.S. economic data. The Institute for Supply Management released findings revealing a modest, unexpected slowdown in the U.S. service sector's growth for January. Specifically, the ISM's services PMI decreased to 52.8 from a revised 54.0 in December. Although a reading above 50 indicates expansion, economists had projected a rise to 54.3 from the originally reported 54.1 for the previous month.
In contrast, payroll processor ADP published separate data showing that private sector employment in the U.S. exceeded expectations for January. According to ADP, private sector employment rose by 183,000 jobs in January, following an upwardly revised increase of 176,000 jobs in December. Economists had anticipated a 150,000 job increase compared to the initially reported addition of 122,000 jobs for the prior month.
Attention on Thursday may focus on a report about weekly jobless claims, alongside preliminary figures on labor productivity and costs for the fourth quarter of 2024.
