Treasury debt prices turned higher Wednesday, erasing earlier losses, as U.S. stocks pared gains, restoring government bonds' safe-haven appeal.
The benchmark 10-year Treasury note's price, which moves inversely to its yield, rose 2/32 for a yield of 4.036 percent, versus 4.044 percent late Tuesday.
Stocks shed some gains as U.S. crude oil rebounded above $125 per barrel, reawakening concerns that high energy costs will add to consumers' pain and drag on the economy, and as financial stocks slipped.
"The strong opening in the equity market hasn't held, attributable to the rebound in oil, and as that has come full circle it has helped Treasurys come back," said Mark Freeman, senior vice president and portfolio manager with Westwood Holdings Group in Dallas.
The unexpected increase in U.S. private payrolls in July earlier allayed worries about deterioration of the labor market and the overall economy, sending bond price down while also reviving concerns the Fed may raise interest rates later this year to fight inflation. The prospect of rate increases is negative for bonds.
"This number extends the debate about the economy," said T.J. Marta, fixed-income strategist at RBC Capital Markets in New York. "This does suggest a possible upward surprise in non-farm payrolls," he said of the government's employment figures to be released Friday.
The ADP National Employment Report showed companies added 9,000 jobs in July, compared with a revised 77,000 drop in June. Analysts polled by Reuters had forecast a 60,000 fall.