Treasury Yields Near Two-Week Low as Jobs, Services Data Clash

  • Private ADP report indicates slower U.S. jobs growth in April
  • ISM data show service sector grew at fastest pace in 4 months

Treasury 10-year yields traded close to the lowest in two weeks after dueling U.S. economic data showed service companies expanded in April at the fastest pace in four months while jobs growth slowed.

Benchmark 10-year note were little changed after the Institute for Supply Management’s non-manufacturing index rose to 55.7 from 54.5 in March, beating economist forecasts. Treasuries advanced earlier after data from the ADP Research Institute showed U.S. companies added fewer jobs than expected last month, before the Labor Department releases official figures on May 6.

“The employment data was on the weak side, ISM non-manufacturing was stronger -- the economic data this morning was on balance a little disappointing because of the jobs number," said Guy LeBas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia. "I find it hard for a material bounce higher in yields."

U.S. debt rallied by the most in two months Tuesday when data from China to Europe pointed to a slowing global economy that would need continued central bank support. Two regional Federal Reserve bank presidents said that an interest-rate increase should be on the table next month, at odds with market expectations.

The yield on the 10-year Treasury note was little changed at 1.79 percent at 12:02 p.m. New York time, according to Bloomberg Bond Trader data. The price of the 1.625 percent note due in February 2026 was 98 1/2.

Futures show traders assign a 12 percent probability to a Fed rate increase next month and a 53 percent chance of an increase this year.

Before it's here, it's on the Bloomberg Terminal.