Treasuries halted a three-day advance before reports this week economists said will show employers added workers last month at a pace that may strengthen the case for advocates of raising U.S. interest rates.
It’s the first time yields on two-, five- and 10-year notes have risen together since March 26. Buoyed by a drop in inflation forecasts and the Federal Reserve’s signal that policy makers won’t rush to raise interest rates, Treasuries capped the longest stretch of quarterly gains since 1998 in the first three months of this year. Treasury bears are still encouraged by an economy where the unemployment rate dropped to the lowest in almost seven years in February to argue for higher borrowing costs.
“Of course, if it’s a strong report, you would expect that yields will go up,” said Piet Lammens, head of research at KBC Bank NV in Brussels, referring to the nonfarm payrolls data due on Friday. While the Fed is dovish, Treasuries “are not completely immune to the strong data. There maybe a few more months of subdued yields and then we hope the economy shows stronger signs again” and yields rise, he said.
The 10-year yield increased one basis point, or 0.01 percentage point, to 1.94 percent as of 10:52 a.m. London time, according to Bloomberg Bond Trader data. The benchmark 2 percent note due in February 2025 fell 1/8, or $1.25 per $1,000 face amount, to 100 18/32. Ten-year yields declined 25 basis points between this year through Tuesday.
Companies added 225,000 jobs in March, after a 212,000 increase the month before, according to the median prediction of economists in a Bloomberg survey before Roseland, New Jersey-based ADP Research Institute releases the report on Wednesday. That will be followed in two day’s time by data from the Labor Department, which are projected to show the world’s largest economy added 245,000 jobs last month.
U.S. government securities returned 1.8 percent in the first quarter, according to Bloomberg World Bond Indexes.