U.S. Treasury yields rose on Wednesday as markets opened for the first trading days of July, but those gains were pared back later in the session after a combination of central bank commentary and labor-market data.
The yield on the 30-year Treasury note climbed 5.9 basis points to 4.962% during the session.
Speaking on a panel of central bankers in Sintra, Portugal, Federal Reserve Governor Kevin Warsh said that inflation expectations and inflation risks have declined in recent weeks. He reiterated that the Federal Reserve remains committed to reducing inflation to its 2% objective and noted that U.S. policymakers will make decisions about raising interest rates when they convene for their next meeting.
Yields began to give back some of their earlier increases after the ADP National Employment Report showed that private-sector employment rose by 98,000 jobs last month. That outcome fell short of the 118,000 jobs economists had expected, following an unrevised gain of 122,000 in May.
Market participants are now looking to the government's payrolls release on Thursday for additional clarity on the labor market's condition. The ADP report and the upcoming official payrolls figure are being watched closely because they can influence expectations for interest-rate policy.
U.S. markets will be closed on Friday for the Independence Day holiday on July 4, truncating the week's trading and leaving investors to digest the available data ahead of the long weekend.
Context and market implications
The intraday pattern of rising then retreating yields reflected an interplay between central-bank remarks that signaled lower inflation risks and private payrolls data that undercut near-term labor-market strength. With both monetary policy messaging and labor-market indicators on investors' radars, attention is focused on the upcoming government payrolls report for a fuller read on employment trends.