NEW YORK: US Treasury debt yields rose on Wednesday as payroll processor ADP reported solid U.S. private-sector job growth in October and a higher open in U.S. stocks reduced the safehaven appeal of government debt.
Benchmark yields approached the 3-1/2 week highs set earlier this week as Wall Street opened higher partly on news that Republicans took over control of the U.S. Senate after Tuesday's elections. The Republican victories bolstered bets on a push for federal legislations friendly to energy and other sectors in the coming year.
The outlook on the U.S. economy improved somewhat after ADP said U.S. companies hired 230,000 workers last month, the most since June.
The latest ADP reading reinforced the view of an encouraging payrolls report due from the Labor Department on Friday, which would support the view the Federal Reserve would consider ending its near zero interest rate policy in mid-2015.
"It makes the employment report on Friday more important," said David Coard, head of fixed income sales and trading at Williams Capital Group in New York. "Yields are too low given the fact the economy has strengthened especially in the labor market."
Benchmark 10-year Treasury notes were 4/32 lower in price, yielding 2.359 percent, up 2 basis points from late on Tuesday. The 10-year yield struck a 3-1/2 week peak at 2.384 percent on Monday.
Investor appetite for Treasuries were held in check by competing supply of corporate debt, which was expected to cross the $110 billion mark in November, according to IFR, a unit of Thomson Reuters.
The Treasury Department said it will sell a combined $66 billion in new three-year, 10-year and 30-year debt issues next week. It added it expects to gradually reduce the auction sizes of two-year and three-year notes over the next quarter.
Disappointing data released earlier Wednesday on China and the euro zone reinforced concerns that problems in those major economies would eventually slow hiring and business activity at home and prevent the Fed from raising interest rates at least into mid-2015.
There have been growing expectations the European Central Bank would need to take more action to stimulate the region's economy, but a Reuters report on Tuesday showing tension between national central bankers and ECB President Mario Draghi suggested further policy measures are unlikely anytime soon.
The ECB will hold a policy meeting on Thursday.
"The elephant in the room is the euro zone," said Zach Pandl, senior rates strategist at Columbia Management in Minneapolis.
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