US Treasurys slide after scorching ADP report and 10-year note auction

Andrew Renneisen | Getty Images

U.S. government debt prices fell on Wednesday as investors digested strong employment data and eyed the 10-year note auction.

The Treasury Department auctioned $20 billion in 10-year notes at a high yield of 2.56 percent. The bid-to-cover ratio, an indicator of demand, was 2.66, well above the recent 10-auction average of 2.45.

Indirect bidders, which include major central banks, were awarded 65.76 percent, slightly above a recent average of 64 percent. Direct bidders, which includes domestic money managers, bought 15.69 percent, more than double of a 7 percent recent average.

The yield at the 10-year note auction is the highest since July 2014.

The yield on the benchmark 10-year Treasury notes, which moves inversely to price, was higher at around 2.556 percent, while the yield on the 30-year Treasury bond was also higher at 3.145 percent.

The yield on two-year Treasury notes climbed to 1.354 percent.

Meanwhile, Federal Reserve Chair Janet Yellen has signaled a U.S. interest rate would be likely this month with the Federal Open Market Committee scheduled to meet on March 14-15.

US 10-YR
US 30-YR

Private sector employment rose by 298,000 jobs last month, according to ADP and Moody's, well above a Reuters estimate of 190,000. The report encompassed the first full month under President Donald Trump, who has pledged to rebuild the nation's aging infrastructure system.

Robert Tipp, chief investment strategist at PGIM Fixed Income, said the "strong ADP number signals likely very strong jobs number Friday."

Other data released Wednesday included fourth-quarter non-farm productivity, which was left unrevised at a gain of 1.3 percent. Wholesale inventories fell 0.2 percent, more than expected.

In oil markets, prices edged lower after industry data pointed to a ninth consecutive week of inventory builds which inflamed concerns regarding global oversupply.

Brent crude traded at around $53.17 a barrel on Wednesday, down 4.92 percent, while U.S. crude was around $50.25 a barrel, down 5.44 percent.

—Reuters contributed to this report.