Treasury Yields Higher Ahead of Private Payroll Data

U.S. Treasury yields climbed on Wednesday morning ahead of the release of private payroll data for April.

The yield on the benchmark 10-year Treasury note rose to just above 1.6%. The yield on the 30-year Treasury bond advanced to 2.278%. Yields move inversely to prices.

April’s ADP Employment Change data, which tracks the growth of private payrolls, is due to be published at 8:15 a.m. ET on Wednesday.

Economists polled by Dow Jones are expecting 800,000 private jobs added in April, compared to the 517,000 in March, according to ADP. These numbers come ahead of Friday’s closely-watched jobs report.

The final Markit purchasing managers’ index (PMI) for April is set to be released at 9:45 a.m. ET, followed by the ISM non-manufacturing PMI for last month at 10 a.m. ET.

The move higher in U.S. yields on Wednesday comes a day after Treasury Secretary Janet Yellen said that interest rates may need to “rise somewhat” to keep the economy from overheating as the country recovers from the coronavirus pandemic.

Those comments appeared to hit equities and cause rates to come off their lows on Tuesday.

“The curious case of Yellen’s rate comments remains topical,” Ian Lyngen, head of rates strategy at BMO Capital Markets, wrote Wednesday. “There is a lot of stimulus in the system and if all goes according to plan, the Fed will taper and liftoff will be on the table.”

“Not only was it notable that stocks and Treasuries sold off on this observation, but Yellen’s later ‘clarification’ speaks to a market that remains very much on edge regarding the reflation narrative,” he added.

Some investors worry that an economic rebound in 2021 could cause a rash of inflation and convince the central bank that it needs to rein in its easy monetary policy sooner than telegraphed.

Notwithstanding signs of an economic recovery and inflation, Federal Reserve officials have insisted they will keep interest rates near zero for the foreseeable future.

— CNBC’s Maggie Fitzgerald contributed to this report.