U.S. Treasury Prices Inch Higher

By Akane OtaniFeaturesDow Jones Newswires

U.S. government bond prices inched higher Wednesday, heading toward their second-consecutive day of gains.

The yield on the benchmark 10-year U.S. Treasury note was recently at 2.326%, according to Tradeweb, compared with 2.332% on Tuesday. Yields fall as bond prices rise.

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Bond yields fell overnight, then ticked higher after data showed hiring at private U.S. employers grew less than expected in September. Firms across the country added 135,000 workers to their ranks last month, according to payroll processor Automatic Data Processing Inc. and forecasting firm Moody's Analytics, compared with the 150,000 economists surveyed by The Wall Street Journal had expected.

Some analysts cautioned against taking too much stock in the day's ADP reading. The data can be volatile, they said, and not always a reliable predictor of the U.S. Bureau of Labor Statistics' widely watched monthly jobs report, which investors will get a look at Friday.

Economists are expecting to see nonfarm payrolls rise by 80,000 in September, down from 156,000 the prior month.

A weaker-than-expected jobs report could stoke demand for government bonds, which tend to rise when investors are less confident about the economic environment.

Still, others remain skeptical of a dramatic move in Treasurys anytime soon.

Bond yields have remained in a relatively narrow range in recent months, even as investors have contended with the prospect of a tax-cut package and a potential change in leadership at the Federal Reserve next year.

One of the possible candidates, former Fed governor Kevin Warsh, is seen by some investors as likely to be more hawkish than current Fed Chairwoman Janet Yellen -- something that could put pressure on government bonds if he is appointed.

Yet bonds have made few big moves this week, with the yield on the 10-year U.S. Treasury note little changed from where it settled Friday at 2.328%.

"Everyone is puzzled by this," Zhiwei Ren, a managing director and portfolio manager at Penn Mutual Asset Management, said of the bond market's lull. "You go to conferences and everyone is asking when we're going to see volatility in the rates market again."

Write to Akane Otani at akane.otani@wsj.com

(END) Dow Jones Newswires

October 04, 2017 10:44 ET (14:44 GMT)