Bond Report: 30-year Treasury yield trades near November highs after ADP data, Fitch U.S. downgrade

by | Aug 2, 2023 | Stock Market

The yield on the 30-year Treasury bond was on track to finish at November highs on Wednesday, as traders assessed a downgrade to the U.S. government’s credit rating by rating agency Fitch and a better-than-expected private-sector employment report.

What’s happening
The yield on the 2-year Treasury
slipped by 1.2 basis points to 4.9% from 4.912% on Tuesday.

The yield on the 10-year Treasury
advanced 2.9 basis points to 4.077% from 4.048% Tuesday afternoon.

The yield on the 30-year Treasury
rose 6.6 basis points to 4.17% from 4.104% late Tuesday. Tuesday’s level was the highest since Nov. 9, based on 3 p.m. Eastern time figures from Dow Jones Market Data.

What’s driving markets Data released on Wednesday showed that the U.S. added 324,000 private-sector jobs in July, according to payroll processor ADP — signaling the labor market remains healthy as businesses hired more workers to keep up with demand.The ADP data plus Friday’s nonfarm payrolls report will feed into the Federal Reserve’s calculations on whether to continue tightening monetary policy, though the ADP report is seen as having a poor track record of foreshadowing the government’s official employment report. Meanwhile, equities showed signs of stress after Fitch downgraded the U.S. government’s credit rating on Tuesday. Investors, analysts and officials were assessing the most likely impact of Fitch’s move on Treasury’s $1 trillion third-quarter borrowing needs. On Wednesday, the U.S. Treasury published its August refunding statement. It plans to offer $103 billion of Treasury securities next week, broken down as follows:
A 3-year note in the amount of $42 billion, maturing Aug. 15, 2026, to be auctioned at 1 p.m. Eastern time next Tuesday.

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