Bond Prices Consolidate Near Highs

U.S. Treasury prices consolidated late Wednesday, having little response on the non-event of the Beige Book released in advance of the June Federal Open Market Committee (FOMC) meeting. The long bond led the move higher while the shorter end dragged as curve trades continued to flatten. Participants have been looking to the May employment report with expectations on payrolls sneaking higher, up about 150,000, making a June tightening almost certain, barring any breakdown in the earnings area.

The 30-year yield recently traded near the lows at 2.8645% from a 2.9005% high and close at 2.885% Tuesday. The 10-year yield was held near 2.20% versus a 2.2342% high and 2.215% close. The five-year yield was near 1.75% from a 1.7812% high and 1.76% Tuesday. The two-year yield was boosted off the lows late to trade near 1.28% from a 1.254% low, 1.313% overnight high and 1.285% close.

Chatter surrounding Friday’s payrolls report, and the speed bump of the ADP private payrolls release (pushed to Thursday versus the usual Wednesday due to the market closure on Monday) has picked up, with the market once again leaning toward the higher end of some wide ranges of expectations. Consensus for the nonfarm payrolls print is running near 185,000, but within a range of 140,000 to 210,000.

By Sonia Taylor