Payroll processing firm ADP just released its monthly National Employment Report — which estimated that 238,000 workers were added to private-sector payrolls in December — and Treasuries are taking a hit in the wake of the release.
10-year Treasury futures are down 0.4%, while the yield on the 10-year Treasury note is trading at 2.99%, up 5 basis points from Tuesday's close.
The 7-year note is trading 6 basis points higher at 2.42%.
S&P 500 futures, meanwhile, just went positive.
" The jump in jobs per the ADP report fits with the tone of the employment component of the ISM services PMI report," says Adrian Miller, director of fixed income strategy at GMP Securities. "And if historical relationships are observed, Friday’s nonfarm payrolls report should reveal private-sector job growth in December of 215,000, compared to expectations of 197,000, and provide the Fed with an all clear signal to continue its taper program."
Next up is a Treasury auction of 10-year notes at 1 PM ET.
"The market has been weak all morning and took another dip on this report providing a nice concession later today," says David Ader, head of government bond strategy at CRT Capital Group.
After the auction, all eyes turn to the release of the minutes from the FOMC's December meeting, due out at 2 PM.
"The FOMC minutes are likely to be the most market-moving event today, with the Fed potentially discussing additional qualitative easing options," says Gennadiy Goldberg, a U.S. strategist at TD Securities. "With the December communique bringing relatively 'soft' forward guidance in accompaniment to QE tapering, there is room for the Treasury market to rally if the Fed discussed lowering the unemployment rate threshold or improving forward guidance in other ways (e.g. balance sheet guidance). While the discussion of such options is likely to be a positive for Treasuries, upcoming long-end auctions could serve to delay any rally attempt."
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