U.S. Government Bonds Decline Amid Stock Gains, Labor Data

U.S. government bonds fell Thursday as signs pointed to continuing strength in the labor market.

The yield on the benchmark 10-year Treasury note rose to 2.467%, according to Tradeweb, from 2.445% Wednesday. Yields rise as bond prices fall.

Some investors sold bonds and bought stocks as equities around the world advanced and the Dow Jones Industrial Average pushed above 25000 for the first time.

Private U.S. employers added 250,000 workers in December, according to data from payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics. Economists surveyed by The Wall Street Journal had expected the addition of 195,000 jobs. The November total was revised down to 185,000 from 190,000.

The ADP report arrives ahead of monthly Labor Department data on Friday, which economists expect to show a 180,000 jump in nonfarm jobs for December, compared with 228,000 the prior month.

"It's a risk-on move to start the year," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. "Everything's pushing in one direction, which is higher Treasury yields."

Investors will be looking at the wage data in Friday's labor report for signs that unemployment, which has held at 4.1% for the prior two months, a level well below what economists consider to mean full employment in the U.S. economy, is starting to translate into higher take-home pay for workers. Some investors have said that the relatively slow growth in wages has led to inflation being stuck below the Federal Reserve's 2% target. It last touched that level in February 2017.

Inflation poses a threat to the value of long-term government bonds, because it chips away at the purchasing power of their fixed payments.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

U.S. government bonds edged lower Thursday as signs pointed to continuing strength in the labor market.

The yield on the benchmark 10-year Treasury note rose for the second time in the past three trading sessions to 2.452% from 2.445% Wednesday. Yields rise as bond prices fall.

Some investors sold bonds and bought stocks as equities around the world advanced and the Dow Jones Industrial Average pushed above 25000 for the first time.

Private U.S. employers added 250,000 workers in December, according to data from payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics. Economists surveyed by The Wall Street Journal had expected the addition of 195,000 jobs. Upbeat economic data tends to weaken demand for assets that investors see as havens, including Treasurys.

The ADP report arrives ahead of Friday's monthly Labor Department data, which economists expect to show a 180,000 jump in nonfarm jobs for December, compared with 228,000 the prior month.

"It's a risk-on move to start the year," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. "Everything's pushing in one direction, which is higher Treasury yields."

Investors will be looking at the wage data in Friday's labor report for signs that low unemployment, which has held at 4.1% for the prior two months -- a level below what economists consider to mean full employment in the U.S. economy -- is starting to translate into higher take-home pay for workers. Some investors have said that the relatively slow growth in wages has led to inflation being stuck below the Federal Reserve's 2% target. It last touched that level in February 2017.

Inflation poses a threat to the value of long-term government bonds, because it chips away at the purchasing power of their fixed payments.

Write to Daniel Kruger at Daniel.Kruger@wsj.com

(END) Dow Jones Newswires

January 04, 2018 17:26 ET (22:26 GMT)