Treasury yields slide after weak ADP payrolls data before main jobs report Friday

U.S. Treasury yields ticked lower on Thursday as the latest employment data came in far weaker than expected.

The yield on the 10-year Treasury yield shed more than 2 basis points to 3.742%. The 2-year Treasury yield was last at 3.731% after sliding by around 4 basis points.

Yields and prices move in opposite directions and one basis point equals 0.01%.

ADP said Thursday that private payrolls rose by 99,000 in August. That’s not only the smallest gain since early 2021, but came in well below the consensus forecast of 140,000 from economists polled by Dow Jones.

This can bolster fears about the health of the U.S. economy as investors gear up for the big jobs data release on Friday.

Specifically, traders are awaiting closely followed data on nonfarm payrolls, unemployment and wages due Friday morning. The weaker-than-expected July jobs report prompted a wave of recession fears and market volatility, as questions about whether the Federal reserve should have cut interest rates sooner emerged.

The data comes ahead of the next Federal Reserve meeting later this month, when the central bank is expected to cut interest rates. Uncertainty remains about the size of the rate cut.

On Wednesday, the 10- and 2-year Treasury yields briefly normalized, reversing the inverted yield curve which is historically seen as a recession indicator. The 10-year yield was above the 2-year yield for the first time since June 2022. The 10- and 2-year yields remained close together on Thursday.