Treasuries Finish Volatile Session Nearly Unchanged

Following the release of mixed U.S. economic data, treasuries saw substantial volatility in morning trading on Wednesday before ending the session roughly flat.

Bond prices showed wild swings over the course of the morning but spent the afternoon lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.184 percent.

Treasuries initially moved to the upside after payroll processor ADP released a report showing private sector employment increased by much less than expected in the month of July.

ADP said private sector employment rose by 330,000 jobs in July after surging by a downwardly revised 680,000 jobs in June.

Economists had expected private sector employment to spike by 695,000 jobs compared to the jump of 692,000 jobs originally reported for the previous month.

However, bond prices pulled back sharply after a separate report from the Institute for Supply management showed growth in U.S. service sector activity accelerated much more than expected in July.

The ISM said its services PMI jumped to an all-time high of 64.1 in July after pulling back to 60.1 in June, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 60.4.

The volatility waned in afternoon trading, as traders looked ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect the report to show employment surged up by 880,000 jobs in July after spiking by 850,000 jobs in June. The unemployment rate is expected to dip to 5.7 percent from 5.9 percent.

Reports on initial jobless claims and the U.S. trade deficit are likely to attract some attention on Thursday, although trading activity may be somewhat subdued ahead of the monthly jobs report.

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