U.S. Treasury yields climbed on Wednesday morning after private payroll data showed employers continued to add positions back at a steady clip during the month of April.
The yield on the benchmark 10-year Treasury note rose to just above 1.62%. The yield on the 30-year Treasury bond advanced to 2.29%. Yields move inversely to prices.
Private job growth accelerated in April but fell a bit short of lofty Wall Street expectations, according to a report Wednesday from ADP.
The payroll processing firm said companies added 742,000 workers for the month, a jump from March’s upwardly revised 565,000. The print was just short of the 800,000 forecast from economists surveyed by Dow Jones.
The leisure and hospitality sector, which suffered some of the worst job losses during the Covid-19 pandemic, led growth with 237,000 new positions. The Labor Department will on Friday release its jobs statistics for April, including the official unemployment rate, labor force participation rate and non-farm payrolls.
The final Markit purchasing managers’ index (PMI) for April is set to be released at 9:45 a.m. ET, followed by the ISM non-manufacturing PMI for last month at 10 a.m. ET.
The move higher in U.S. yields on Wednesday comes a day after Treasury Secretary Janet Yellen said that interest rates may need to “rise somewhat” to keep the economy from overheating as the country recovers from the coronavirus pandemic.
Those comments appeared to hit equities and cause rates to come off their lows on Tuesday.
“The curious case of Yellen’s rate comments remains topical,” Ian Lyngen, head of rates strategy at BMO Capital Markets, wrote Wednesday. “There is a lot of stimulus in the system and if all goes according to plan, the Fed will taper and liftoff will be on the table.”
“Not only was it notable that stocks and Treasuries sold off on this observation, but Yellen’s later ‘clarification’ speaks to a market that remains very much on edge regarding the reflation narrative,” he added.
Some investors worry that an economic rebound in 2021 could cause a rash of inflation and convince the central bank that it needs to rein in its easy monetary policy sooner than telegraphed.
Notwithstanding signs of an economic recovery and inflation, Federal Reserve officials have insisted they will keep interest rates near zero for the foreseeable future.
The U.S. Department of the Treasury said Wednesday that it is offering $126 billion of Treasury securities to refund approximately $47.7 billion of privately-held Treasury notes and bonds maturing on May 15, 2021.
— CNBC’s Maggie Fitzgerald contributed to this report.
