NEW YORK: US Treasury yields rose on Wednesday on fewer growth jitters as a combination of domestic and foreign data supported the recently revived view that the Federal Reserve will raise interest rates this year, causing traders to sell some safe-haven government debt.
The yield on the benchmark 10-year note rose to its highest in 3-1/2 weeks after the ADP employment report showed employers added 214,000 jobs in February, above economists' expectations, suggesting solid job growth.
The data came a day after private data showed manufacturing activity rebounded in February, suggesting the US economy was on a steadier path. The private employment data also came days ahead of Friday's key employment report that investors look at closely for signs of the strength of the US economy.
"The ADP adds to beliefs the job market is OK and that was one of the fundamental factors behind the FOMC decision to start to normalize," Kim Rupert, managing director of global fixed income at Action Economics in San Francisco, told Reuters in the Global Markets Forum. The Federal Open Market Committee, the US central bank's policy-setting group, will meet March 15-16.
The Fed will release its latest Beige Book on regional economic conditions at 2 p.m. (1900 GMT).
US federal funds futures imply traders see only a 3 percent chance of the Fed raising rates at its upcoming meeting, according to Reuters' FedWatch program.
Although oil prices retreated from recent gains and stocks were down on the day, analysts said sentiment among investors was that volatility seen earlier in the year was calming.
"The urgency we saw earlier in the year, the need to buy because people thought the world was coming to an end, is starting to settle down," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
Further adding to the view that markets have found some calm was a report that China's move to cut banks' reserve requirement ratio indicates a slight easing bias in China's monetary policy, but is not a signal of any coming large-scale stimulus. Benchmark 10-year notes were last down 5/32 in price to yield, up from 1.835 percent late on Tuesday.
The 10-year yield earlier hit 1.872 percent, its highest in over three weeks.
The 30-year bond was last up 5/32 in price to yield 2.697 percent, down from 2.705 percent late on Tuesday. The 30-year yield touched 2.709 percent, a two-week high.
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