Treasuries moved sharply higher over the course of the trading day on Tuesday, more than offsetting the pullback seen in the previous session.
Bond prices showed a strong move to the upside early in the session and remained firmly positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 11.7 basis points to 4.171 percent.
The ten-year yield more than offset the 6.2 basis point increase seen on Monday, ending the session at its lowest closing level in over three months.
Following an initial rebound, treasuries saw further upside after the Labor Department released a report showing a bigger than expected decrease in U.S. job openings in the month of October.
The report said job openings slid to 8.73 million in October from 9.35 million in September, falling to the lowest level since March 2021. Economists had expected job openings to edge down to 9.30 million.
The data helped reinforce expectations that the Federal Reserve will keep interest rates unchanged in the coming months and potentially lower rates as early as March 2004.
Traders largely shrugged off a separate report released by the Institute for Supply Management showed service sector activity in the U.S. grew at a slightly faster rate in the month of November.
The ISM said its services PMI crept up to 52.7 in November from 51.8 in October, with a reading above 50 indicating growth. Economists had expected the index to inch up to 52.0.
Meanwhile, Quincy Krosby, Chief Global Strategist for LPL Financial, cautioned that the nosedive by the ten-year yield over the past month could reflect an economy that is deteriorating at a faster than desired clip.
“If the economic landscape continues to decline faster than consensus estimates, financial markets will demand that the Fed begins easing quickly,” Krosby said.
“The ten-year Treasury yield should be monitored as keenly as it was during its upward climb,” she added. “A faster pace downward should similarly be acknowledged by what it implies—that a growth scare has taken hold.”
ADP’s report on private sector employment in the month of November may attract some attention on Wednesday as traders look ahead to the Labor Department’s more closely watched monthly jobs report on Friday.
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