April 5, 2017 / 3:32 PM / 4 months ago

TREASURIES-Yields edge higher after strong U.S. private payrolls data

4 Min Read

    * ADP private payrolls at 263,000 in March
    * Data suggests strong U.S. non-farm payrolls report Friday
    * Faster Fed rate hike pace viewed as possible
    * Fed to release March meeting minutes at 2 p.m. EDT (1800
GMT)

    By Sam Forgione
    NEW YORK, April 5 (Reuters) - U.S. Treasury yields edged
higher on Wednesday after stronger-than-expected U.S. private
payrolls data boosted expectations of a robust jobs report on
Friday and possibly a faster pace of interest rate increases
from the Federal Reserve.
    U.S. companies added 263,000 workers in March, suggesting
further tightening of the labor market, payrolls processor ADP
said. The figure was the most since December 2014 and far
exceeded expectations of economists polled by Reuters for a gain
of just 187,000. 
    The data came ahead of the U.S. Labor Department's monthly
non-farm payrolls report Friday, which includes both public and
private-sector employment. Economists polled by Reuters expect
the report to show U.S. employers added 180,000 jobs in March.

    Analysts said traders probably viewed the ADP data as a sign
of a strong U.S. jobs report. 
    That would "make an even better case for the Fed to continue
its tightening and maybe increase the probability that they
could move three more times this year," said David Coard, head
of fixed income sales and trading at Williams Capital Group in
New York. 
    The minutes of the central bank's March meeting are due at
2:00 p.m. EDT (1800 GMT).
    Benchmark 10-year Treasury yields hit a session high of
2.382 percent in the wake of the ADP data from 2.350 percent
late on Tuesday and a more than five-week low of 2.314 percent
touched earlier that day.  
    Yields stabilized to trade only slightly higher on the day,
however, after the Institute for Supply Management said its
index of non-manufacturing activity fell to 55.2 in March from
57.6 in February. The latest reading was below expectations of
57.0 from a Reuters poll of 64 economists.
    U.S. 10-year Treasury notes were last down 3/32
in price to yield 2.362 percent. The two-year was
roughly flat in price to yield 1.254 percent, while 30-year
yields were last at about 3 percent from 2.992
percent late on Tuesday.
    
April 5 Wednesday 10:53AM New York / 1453 GMT
                               Price                  
 US T BONDS JUN7               151-15/32    -0-6/32   
 10YR TNotes JUN7              124-248/256  -0-16/25  
                                            6         
                               Price        Current   Net
                                            Yield %   Change
                                                      (bps)
 Three-month bills             0.79         0.8026    0.000
 Six-month bills               0.905        0.9218    0.003
 Two-year note                 99-254/256   1.254     0.004
 Three-year note               100-116/256  1.4669    0.005
 Five-year note                99-248/256   1.8816    0.004
 Seven-year note               99-184/256   2.1686    0.008
 10-year note                  99-12/256    2.3587    0.009
 30-year bond                  100-8/256    2.9983    0.006
                                                      
   DOLLAR SWAP SPREADS                                
                               Last (bps)   Net       
                                            Change    
                                            (bps)     
 U.S. 2-year dollar swap        33.50        -0.50    
 spread                                               
 U.S. 3-year dollar swap        28.75        -1.00    
 spread                                               
 U.S. 5-year dollar swap        11.00        -0.50    
 spread                                               
 U.S. 10-year dollar swap       -2.75        -1.00    
 spread                                               
 U.S. 30-year dollar swap      -39.50        -0.75    
 spread                                               
 
 (Reporting by Sam Forgione; Editing by Lisa Von Ahn)
  

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