NEW YORK: Yields on benchmark US 10-year Treasury notes were little moved on Wednesday but on track for their largest monthly gain in more than a year as strong US data has limited volatility and investors have taken profits from after declining yields in June and July.
Yields on benchmark notes, which move inversely to prices, have risen 10 basis points in August, the biggest increase since June 2015.
On two-year Treasury notes, yields were headed toward their biggest monthly gain since November as the data and comments from a chorus of Federal Reserve officials that rate hikes look appropriate before year-end has increased expectations for short-term interest rates to rise.
Two-year yields have risen nearly 12 basis points this month.
On Wednesday, analysts said traders were holding firm with their eyes toward Friday's US non-farm payrolls report, which could indicate what action the Fed is likely to take at its upcoming meeting on Sept. 20-21.
ADP's national employment report showed the US added 177,000 private sector jobs in August, slightly more than the 175,000 economists surveyed by Reuters had expected.
Yields slipped slightly, in a move analysts said was likely due to buying from overseas buyers.
Central bank easing, combined with increased global demand for US government debt, which continues to offer higher yield than most developed market competitors, have offset selling pressures from increased inflation expectations to keep Treasury market moves muted ahead of Friday's data, said Ira Jersey, senior client portfolio manager at OppenheimerFunds.
The Bank of England recently announced it was increasing bond buying in its quantitative easing program and both the Bank of Japan and European Central Bank are in the midst of QE programs of their own.
Jersey also highlighted comments from BOJ Governor Haruhiko Kuroda who said over the weekend that the central bank had “ample space" for more monetary policy easing.
Benchmark 10-year Treasury notes rose 2/32 in price from their Tuesday close to yield 1.56 percent. Two year prices rose 1/32, yielding 0.77 percent.
“The irony is, even at 1.5 percent, this unprecedentedly low yield is still high vis-?-vis other developed markets," Jersey said. “So there's still demand for Treasuries from overseas."
Japanese 10-year government bonds yield -0.068 percent, German 10-year Bunds offer -0.086 percent yield and British government debt currently yields 0.614 percent.