Last Updated: July 3, 2024 at 2:39 p.m. ET
First Published: July 3, 2024 at 4:26 a.m. ET
Treasury yields finished lower on Wednesday for a second straight session after the Institute for Supply Management’s index of services businesses produced its lowest reading since the height of the pandemic in May 2020.
The bond market closed earlier than usual, at 2 p.m. Eastern time, on Wednesday and will remain closed on Thursday for Independence Day.
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Treasury yields finished lower on Wednesday for a second straight session after the Institute for Supply Management’s index of services businesses produced its lowest reading since the height of the pandemic in May 2020.
The bond market closed earlier than usual, at 2 p.m. Eastern time, on Wednesday and will remain closed on Thursday for Independence Day.
Read: How the Fourth of July holiday affects the U.S. markets — including today
What happened
- The yield on the 2-year Treasury
BX:TMUBMUSD02Y
dropped 4.6 basis points to 4.691%, from 4.737% on Tuesday. Wednesday’s closing level is the lowest since June 14, based on figures from Dow Jones Market Data. - The yield on the 10-year Treasury
BX:TMUBMUSD10Y
fell 8.9 basis points to 4.346%, from 4.435% on Tuesday. - The yield on the 30-year Treasury
BX:TMUBMUSD30Y
slipped 8.8 basis points to 4.519%, from 4.607% on Tuesday.
What drove markets
In data released on Wednesday, service-oriented companies such as restaurants and retailers contracted in June for the second time in three months in another sign that U.S. growth is waning. The ISM’s index of service businesses sank to 48.8% last month from 53.8% in May, reaching its lowest reading in four years.
Earlier in the day, paycheck company ADP said U.S. businesses had added 150,000 new jobs in June — fewer than the 160,000 jobs expected by economists polled by the Wall Street Journal.
Meanwhile, initial-jobless-benefit claims rose by 4,000 to 238,000 last week, remaining near a one-year high due to big increases in New York, New Jersey and California. Economists had expected 233,000 new claims for the seven-day period that ended on June 29.
“Businesses have been extremely reticent to let go of workers that they struggled to find over the last 3 years. We doubt that they will be able to hold on to everyone indefinitely, but they’re going to try,” said U.S. economist Thomas Simons at Jefferies.
“Although we still see layoff announcements in the headlines, they have not yet translated into materially higher claims counts,” he wrote in a note. “We are not sure if this is because of generous severance packages or if the businesses simply aren’t letting as many people go as the announcements suggest. Evidence from other data sets suggests that workers who are laid off are continuing to find new jobs with relative ease.”
Also on Wednesday, minutes from the Federal Reserve’s June 11-12 meeting were released. The minutes showed no consensus view among officials over how many months of improving data would be needed before they’d have enough confidence to cut interest rates.