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The US Treasury market is under pressure on Wednesday after the blowout ADP private payrolls report showed the addition of 298,000 jobs in February. That was well ahead of the 187,000 print that economists were expecting and marked a big jump up from the 246,000 job gain in January.
Traders priced in a rate hike with 100% certainty after the report, according to Bloomberg’s World Interest Rate Probability.
And that is pushing up yields across the curve.
Here’s a look at the scoreboard as of 10:21 a.m. ET:
2-year +3.1 bps @ 1.358% 3-year +4.3 bps @ 1.673% 5-year +4.3 bps @ 2.093% 7-year +4.7 bps @ 2.389% 10-year +4.4 bps @ 2.561% 30-year +3.4 bps @ 3.155%
Yields are higher by as much as 5 basis points with the belly of the curve seeing the biggest impact. The benchmark 10-year yield is at its highest level in more than two months, when it topped out at 2.64% about five weeks after Trump’s election victory.
Wednesday’s selling has caused bear flattening (shorter-dated yields going up faster than longer-dated yields) along the yield curve with the 5-30-year spread pressing to 106 bps and holding near its flattest levels since September. A move below 105 bps will have the curve at its tightest level since 2007.