US Treasuries mostly closed higher on Wednesday, strengthening during the morning session after weaker-than-expected ADP private-sector employment data, even amidst continued busy corporate new debt issuance. However, short-term bonds subsequently relinquished their gains. In the US Treasury options market, demand for bets on a decline in the 10-year yield persisted, while the relative strength of UK government bonds provided additional support.
Shortly after 3 PM New York time, long-end yields were still down nearly 5 basis points for the day, while short-term yields were virtually unchanged. This pushed the 2-year/10-year and 5-year/30-year yield spreads close to their daily lows, narrowing by approximately 4 basis points and 3 basis points, respectively.
Treasury futures rose to their session highs shortly after the release of the December ADP employment data, extending earlier gains. The data showed private-sector payrolls increased by 41,000 for the month, falling short of the estimated 50,000.
New corporate debt issuance pushed the week's cumulative issuance total to a new post-pandemic high, with 11 issuers collectively bringing $16.35 billion in new investment-grade bonds to market.
As of 3:30 PM ET: The 2-year Treasury yield was at 3.4653%, The 5-year Treasury yield was at 3.6924%, The 10-year Treasury yield was at 4.1377%, The 30-year Treasury yield was at 4.8182%, The yield spread between the 5-year and 30-year Treasuries was 112.4 basis points, The yield spread between the 2-year and 10-year Treasuries was 66.83 basis points.
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