MW: Treasurys decline as ADP says job market shrunk
Government to sell $81 billion in debt next week
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices extended declines slightly on Wednesday, sending yields higher, after ADP said the private sector cut 22,000 jobs in January.
Yields on 10-year notes (UST10Y 3.67, +0.04, +1.02%) rose 3 basis points to 3.68%. A basis point is 0.01% and yields move inversely to prices.
Yields on 2-year notes (UST2YR 0.87, +0.02, +2.24%) increased 2 basis points to 0.87%.
The ADP jobs data excludes government workers, which many analysts expect to be especially high as the government hires workers to conduct the Census.
ADP's data also comes two days before the Bureau of Labor Statistics releases its more closely-followed estimate of January nonfarm payrolls, which economists surveyed by MarketWatch expect to show a 20,000 increase in payrolls, which would be the biggest improvement since 2007. See more on ADP jobs data.
The jobs data Wednesday and Friday "should support the notion of stronger economic outlook," said Thomas di Galoma, head of fixed-income rates trading at Guggenheim Partners
Also, Treasury Department said it will sell $81 billion in debt next week.
It will auction $40 billion in 3-year notes (UST3YR 1.40, +0.02, +1.45%) on Tuesday, $25 billion in 10-year notes (UST10Y 3.67, +0.04, +1.02%) on Wednesday and $16 billion in 30-year bonds (UST30Y 4.59, +0.04, +0.77%) on Thursday .
The amounts are the same as at the last refunding, as many analysts expected. See more on Treasury auctions.
"Treasury anticipates that nominal coupon auction sizes will stabilize at current levels," the department said in a statement. However, sales of inflation-linked debt will be gradually expanded, as previously announced.
The Treasury will hold a conference about the refunding later in the session and may refer to plans to sell more inflation-indexed debt, according to RBS Securities, one of the 18 primary government-security dealers that are required to bid at auctions.
"I expect that Treasury will go out of their way today to alert the markets that the steady rise in Treasury coupon issue sizes is likely over," said Bill O'Donnell at RBS, in a note.
Still to come at 10 a.m. Eastern time is a report from the Institute for Supply Management, which is expected to show the services sector expanded last month.
