By Min Zeng
U.S. Treasury bonds were off to a strong start in the second
quarter, as a disappointing employment report on Wednesday boosted
demand for haven assets.
Investors piled into ultrasafe U.S. government debt, sending the
yield on the benchmark 10-year Treasury note below 1.9%. Yields
fall as bond prices rise.
Private payrolls in the U.S. increased by 189,000 jobs in March,
said the national employment report compiled by payroll processor
Automatic Data Processing Inc. and forecasting firm Moody's
Analytics. Economists surveyed by The Wall Street Journal projected
ADP to report 225,000 new private-sector jobs.
The release bolstered investors' expectations that the Federal
Reserve would wait until later this year to raise short-term
interest rates.
In recent trading, the yield on the benchmark 10-year Treasury
note was 1.88%, compared with 1.93% on Tuesday, according to
Tradeweb.
The $12.5 trillion market continues to lure investors left
uncertain by uneven global growth and subdued inflation in the
developed world. Mixed economic readings in the U.S. during a harsh
winter have bolstered investors' expectations that the Fed will
take its time in moving to raise interest rates.
Treasurys also offer higher yields than comparable debt
elsewhere in the developed world, another reason investors continue
to pile in.
On Wednesday, the yield on the 10-year German government bond
hit a record low of 0.16%, boosting the attractiveness of
higher-yielding U.S. Treasury debt.
The 10-year Treasury yield was 2.173% at the end of 2014. The
yield fell by 0.24 percentage point during the first quarter.
Fed Chairwoman Janet Yellen in late March said the timing to
raise borrowing costs hinges on how the economy performs in the
months ahead. She said the tightening cycle this time would be
gradual. The Fed last raised interest rates in 2006. It has kept
the fed-funds target rate near zero since December 2008.
The nonfarm payrolls report for March, due Friday, is the key
data point to shape up investors' expectations on the timing of the
first interest-rate increase by the Fed in nearly a decade. The
Fed's next policy meeting is set for April 28 and 29.
Economists polled by The Wall Street Journal expect the U.S.
economy to have added 248,000 new jobs in March, after a net gain
of 295,000 in February. The unemployment rate is expected to have
stayed unchanged at 5.5%.
Write to Min Zeng at min.zeng@wsj.com
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