Morning Market Recap: Treasuries Rally After Worst ADP Jobs Decline Since 2002

Market Updates | Written by CEP News | Jul 02 08 13:46 GMT |
(CEP News) - Treasury yields fell to session lows and the U.S. dollar declined following the jobs report from private payroll company ADP. Equity markets were pressured by the report but still opened higher.

The report showed U.S. June employment declining by 79,000 jobs against the 20,000 decline expected. U.S. yields were up 2-3 basis points across the curve prior to the data but the worrying report sparked a reversal.

U.S. two-year yields are down 1.6 bps to 2.63%, with five-year yields down 2.1 bps to 3.33%, 10-year yields down 1.2 bps to 3.99% and 30-year yields down 2.0 bps to 4.53%. The Eurodollar September 08 contract is down 2.5 ticks to 97.03. The yield curve is steeper, with the 10/2-year spread up 0.6 bps to 135.85 bps.

The ADP report was the worst since November 2002 and the U.S. dollar sold off in response.

The Canadian dollar is up 0.0063 to 0.9842 against the U.S. dollar (1.0159 USD/CAD) and up 0.72 to 104.55 against the yen.

The U.S. dollar is up 0.09 to 106.22 against the yen and the Dollar Index is down 0.248 to 72.121.

The euro is up 0.0055 to 1.5847 against the U.S. dollar, down 0.0044 to 1.6099 against the Canadian dollar, up 0.0036 to 0.7952 against the pound sterling and is higher by 0.74 to 168.32 against the yen.

The pound sterling is down 0.0020 to 1.9929 against the U.S. dollar and down 0.0145 to 2.0247 against the Canadian dollar.

Equity markets opened higher following the strong close on Monday.

Toronto's S&P/TSX composite index is up 43 points to 14,510, the Dow Jones industrial average up 19 points to 11,401, the S&P 500 up 5 points to 1,290 and the Nasdaq up 7 points to 2,312.

European stock markets are also higher, with the Eurostoxx up 24 points to 2,874, the UK FTSE 100 up 48 points to 5,528 and the German DAX up 46 points to 6,362.

Yields on two-year Canadian government bonds are up 2.4 bps to 3.26%, with five-year yields up 2.6 bps to 3.48%, 10-year yields up 4.6 bps to 3.78% and 30-year yields up 2.9 bps to 4.11%. The Canadian 10-year note is yielding 20.84 bps less than the U.S. 10-year note.

In Germany, returns on two-year German bonds are up 3.4 bps to 4.61%, with five-year yields up 3.7 bps to 4.66%, 10-year yields up 2.9 bps to 4.64% and 30-year yields up 1.1 bps to 4.84%.

Yields on UK two-year bonds are down 7.5 bps to 5.13%, with five-year yields down 6.7 bps to 5.09%, 10-year yields down 4.3 bps to 5.11% and 30-year yields down 6.6 bps to 4.66%.

All data taken at 9:36 a.m. EDT.

By Adam Button, abutton@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it , edited by Cristina Markham, cmarkham@economicnews.caThis email address is being protected from spam bots, you need Javascript enabled to view it

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