By Vivien Lou Chen and Jamie Chisholm
A selloff in U.S. government debt briefly gained momentum Wednesday morning after data showed private sector hiring in March was the strongest in eight months.
What's happening
The yield on the 2-year Treasury bond BX:TMUBMUSD02Y rose marginally to 4.701% from 4.699% on Tuesday. The yield on the 10-year Treasury bond BX:TMUBMUSD10Y rose 2.6 basis points to 4.389%, from 4.363% on Tuesday. The 30-year Treasury bond BX:TMUBMUSD30Y rose 3.3 basis points to 4.541%, from 4.508% on Tuesday. Tuesday's levels were, respectively, the highest for 10- and 30-year yields since Nov. 27 and Nov. 30, according to 3 p.m. ET data.
What is driving the markets?
Data released Wednesday showed private sector hiring was strong in March. U.S. companies added 184,000 new jobs in March, the biggest increase in hiring since July, payroll company ADP said, above economists' expectations for an increase of 155,000. The report also showed that wages increased.
Strong labor market data and manufacturing sector readings in recent days have put the chance of a 25 basis point cut by the Federal Reserve for June at 59.1%, down slightly from 63.7% ago. one week. CNBC, Atlanta Fed President Raphael Bostic repeated his expectation of a single rate cut this year and said it would likely be appropriate to reduce borrowing costs in the fourth quarter. Federal Reserve Chairman Jay Powell will speak at 12:10 p.m. ET. Other U.S. data released Wednesday showed the economy expanded at a slightly slower pace in March. A barometer of business conditions for service-oriented companies fell to its lowest level in three months but showed that most of the U.S. economy remained in expansion mode, according to the Institute for Supply Management survey.
What strategists say
"With the market once again assiduously focused on the 10-year Treasury yield, the ADP report offers little confidence that inflation is declining at a pace that would allow the Federal Reserve to begin cutting rates as soon as the FOMC meets. in May. [Federal Open Market Committee] meeting," said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, N.C. "The core private sector hiring number was stronger than expectations, while the February revision was similarly stronger, but it was the wage increase which should have the market on notice for Friday's payroll report," Krosby wrote in an email.
-Vivien Lou Chen -Jamie Chisholm
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04-03-24 1014ET
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