Treasuries Close Modestly Lower Following Lackluster Session

After ending the previous session roughly flat, treasuries turned in another lackluster performance during trading on Tuesday.

Bond prices initially moved to the upside but showed a lack of direction as the day progressed before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.8 basis points to 1.800 percent.

The choppy trading came as traders seemed reluctant to make more significant moves ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to increase by 153,000 jobs in January after rising by 199,000 jobs in December. The unemployment rate is expected to hold at 3.9 percent.

The strength of the monthly jobs data could impact expectations regarding how fast the Federal Reserve will raise rates from near-zero levels in an effort to fight inflation.

Payroll processor ADP’s report on private sector employment will provide an early look at the strength of the labor market on Wednesday.

In U.S. economic news, the Institute for Supply Management released a report showing growth in U.S. manufacturing activity continued to slow in the month of January.

The ISM said its manufacturing PMI fell to 57.6 in January from a revised 58.8 in December, although a reading above 50 still indicates growth in the sector. The index decreased for the third straight month, slipping to its lowest level in over a year.

Economists had expected the manufacturing PMI to drop to 57.5 from the 58.7 originally reported for the previous month.

Trading on Wednesday may be impacted by reaction to ADP’s report on private sector employment, which may provide clues about the Labor Department’s more closely watched monthly jobs report.

Source: Read Full Article