U.S. government debt prices rose on Wednesday after data showing a surprisingly steep drop in U.S. private payrolls in June, exacerbating worries about consumer spending in a sputtering economy.
The ADP private jobs data is thinly correlated with the widely watched monthly U.S. non-farm payrolls report, scheduled for release on Thursday. ADP data was weak enough to reinforce bond traders views that Thursday's report will show a deteriorating labor market.
"A bid in Treasurys is perfectly appropriate to hedge bad news in June's formal employment report tomorrow," said David Dietze, chief investment strategist at Point View Financial Services in Summit, N.J.
The ADP National Employment Report, which traders see a preview to the government's monthly jobs reading, showed domestic private payrolls shed 79,000 jobs in June, accelerating from a downwardly revised 25,000 increase in May.
Wall Street economists had forecast a decline of 20,000.
"It was a splash of cold water in our face to see the reports of joblessness in June shooting up like that, suggesting we are just not out of the woods by any means in terms of skirting recession," Dietze said.