U.S. Treasury prices backed off the lows late Wednesda, little-changed in slowing volume. The 10-year held near 2.33% while the long bond played catch-up with the remainder of the curve. The market started with a bid, ticking back to Friday levels, but fell on the data with an upside surprise on the non-manufacturing (services) Purchasing Managers’ Index (PMI), which marked a 12-year high on the headline. The market has also been listening to chatter on candidates for the chairmanship of the Federal Reserve, responding to the perceived hawkish or dovish approaches. Chair Janet Yellen, who may stay on at the end of her term in February, is set to speak at a community banking event. Participants will be listening but generally don’t expect her to offer any projections on policy or her possible successor.
The 30-year yield recently was 2.88% from a 2.8456% low, 2.8933% high and 2.872% close Tuesday. The 10-year yield traded near 2.33% from an early 2.3017% low, 2.3455% high and 2.332% close. The five-year yield was near unchanged at 1.923% from a 1.893% low and 1.9444% high. The two-year yield was swung around 1.48% from a 1.4511% low, 1.4952% high and 1.475% close.
The market was captured midday by news Secretary of State Rex Tillerson would throw an unexpected press conference, amid rumors he might be resigning. The event was a non-event, with the official confirming he would remain at his post.
The September Institute for Supply Management PMI jumped to 59.8 (consensus: 55.5) from 55.3 in August and hit the highest since 2005. The final September Markit Services PMI fell 0.7 points to 55.3 (consensus: 55.2), slicing about half of the previous bump to 56.0 in August and against the preliminary 55.1. September ADP private payrolls came in at 135,000 versus the 140,000 expected. The weekly Mortgage Bankers’ Association (MBA) applications index dropped 0.4% while the purchase index saw a 1.0% gain and a 1.8% refinancing drop.