MW: Treasurys fall after ADP says fewer jobs lost last month
Debt sale sizes, Federal Reserve announcement on tap
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices declined on Wednesday, pushing yields up, after ADP Employment Services said private employers cut 203,000 jobs in October, after a revised 227,000 in September that was fewer than initially reported.
Yields on 10-year notes (UST10Y 3.46, +0.05, +1.46%) rose 5 basis points to 3.53%. A basis point is 0.01%.
Two-year note yields (UST3YR 1.43, +0.01, +0.42%) rose 2 basis points to 0.93%.
Last month's tally was close to what some analysts forecast. See more on ADP data.
While the track record of the ADP report's ability to predict the Labor Department's much more closely watched payrolls figure on Friday, the improvement from September may be extrapolated to indicate a payrolls report to show fewer jobs lost that currently forecast.
Doing that would produce "a bearish number for the market," said strategists at CRT Capital Group. "And the bond market is indeed under pressure this morning."
Still to come at is the Treasury Department's announcement of how much in debt it will sell next week.
Cantor Fitzgerald, one of the 18 primary government-security dealers required to bid at auctions, expects the government to sell $40 billion in 3-year notes (UST3YR 1.43, +0.01, +0.42%) , $24 billion in 10-year notes and $16 billion in 30-year bonds (UST30Y 4.33, +0.07, +1.67%) .
At 10 a.m. is the Institute for Supply Management's report on the non-manufacturing sector.
Finally, settling one of the most hotly debated topics in recent weeks, the Federal Reserve will end its policy meeting around 2:15 p.m. and release its latest policy statement. At this point, few expect any change to the central bank's outlook regarding the possibility of raising interest rates.
"The Fed will acknowledge an economy that appears on the way to recovery but not without some headwinds," said John Spinello, Treasury strategist at primary dealer Jefferies & Co. "We expect no change in the 'extended period' language."
However, he said the statement may refer to some of the operations the fed has tested and can use once it deems the time is right, including reverse repurchase operations to temporarily drain reserves from the financial system. In reverse repos, the Fed sells some of the securities it holds to dealers for a specific -- and usually short -- period, with the promise of giving them back at a certain price.
