October 5, 2016 / 6:56 PM / a year ago

TREASURIES-Yields rise as strong service sector hiring boosts jobs bets

(Recasts with market move, adds details on data; quotes,
updates prices)
    * Friday's September payrolls report in focus
    * Payrolls expectations boosted by ISM hiring data
    * ADP jobs data weaker than expected

    By Karen Brettell
    NEW YORK, Oct 5 (Reuters) - U.S. Treasury yields rose on
Wednesday after data showing strong hiring in the services
sector boosted hiring expectations for Friday's highly
anticipated jobs report.
    The Institute of Supply Management (ISM) said on Wednesday
that U.S. services sector activity rebounded to an 11-month high
in September, while its employment index was also the highest
since October 2015. 
    It came after the ADP National Employment Report data missed
economists' expectations, showing that U.S. private employers
added 154,000 jobs in September. 
    "ISM spurred more thoughts about the possibility of non-farm
payrolls being much better than ADP," said Jim Vogel, an
interest rate strategist at FTN Financial in Memphis, Tennessee.
    Friday's employment report is expected to show 175,000 jobs
were added in the month, according to the median estimate of 100
economists polled by Reuters.
    Investors will also focus on whether August's
weaker-than-expected gain of 151,000 jobs will be revised
upward.
    Benchmark 10-year notes fell 11/32 in price to
yield 1.72 percent, up from 1.68 percent late on Tuesday. The
yields have climbed from a low of 1.53 percent on Friday.
    Demand for safe haven bonds has fallen since Friday, when
concerns about the stability of Deutsche Bank eased.
    "Sentiment has been bad since it became clear that there
wasn't going to be any immediate further concerns about
Deutsche," Vogel said. "There was pent-up selling that wasn't
executed when we were watching that situation that got unleashed
on Friday afternoon."
    Investors are also focused on an Oct. 14 speech by Federal
Reserve Chair Janet Yellen at a Boston Fed economics conference
for any new signals of when the U.S. central bank is likely to
next raise interest rates.
    It may be Yellen's last chance to indicate whether a rate
hike is likely at the Fed's policy meeting in early November.
    Traders are pricing in a 17 percent chance that the Fed will
raise rates in November and a 64 percent chance of an increase
in December, according to CME Group's FedWatch program.

 (Editing by Jeffrey Benkoe and Paul Simao)

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