Treasuries Pull Back Sharply Amid Rebound On Wall Street

(RTTNews) - After moving sharply higher over the two previous sessions, treasuries showed a substantial pullback during trading on Wednesday.

Bond prices came under pressure early in the session and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 15.8 basis points to 1.865 percent.

With the sharp increase on the day, the ten-year yield rebounded after ending Tuesday's trading at a nearly two-month closing low.

The sharp pullback by treasuries came as stocks on Wall Street rebounded strongly following the steep drop in the previous session.

Treasuries also moved lower in reaction to remarks from Federal Reserve Chair Jerome Powell before the House Financial Services Committee.

In prepared remarks, Powell said the Fed still believes it will be appropriate to raise interest rates later this month, citing inflation well above 2 percent and a strong labor market.

The likely increase in interest rates comes even though Powell acknowledged that the Russia-Ukraine conflict has introduced significant uncertainty for the U.S. economic outlook.

"Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways," Powell said. "We will need to be nimble in responding to incoming data and the evolving outlook."

On the U.S. economic front, payroll processor ADP released a report showing U.S. private sector employment jumped by much more than expected in the month of February.

ADP said private sector employment surged by 475,000 jobs in February compared to economist estimates for an increase of 388,000 jobs.

The report also showed a substantial revision to the January data, with the revised data showing employment spiked by 509,000 jobs compared to the previously reported loss of 301,000 jobs.

Later in the day, the Fed's Beige Book said economic activity in the U.S. has expanded at a modest to moderate pace since mid-January.

Trading on Thursday may be impacted by reaction to reports on weekly jobless claims, factory orders and service sector activity, while traders are also likely to keep an eye on the latest developments in Ukraine.