Treasurys are tumbling after the blowout ADP report

Roll Fall England Cheese Rolling HillMatt Cardy/Getty ImagesContestants in the men’s race chase a cheese down the steep gradient of Cooper’s Hill during the annual Bank Holiday tradition of cheese-rolling on May 27, 2013 in Brockworth, Gloucestershire, England.

The US Treasury market is under pressure on Wednesday after the blowout ADP private payrolls report showed the addition of 298,000 jobs in February. That was well ahead of the 187,000 print that economists were expecting and marked a big jump up from the 246,000 job gain in January.

The report caused traders to price in a rate cut with 100% certainty, according to Bloomberg’s World Interest Rate Probability.

And that’s what is pushing up yields across the curve.

Here’s a look at the scoreboard as of 10:21 a.m. ET:

  • 2-year +3.1 bps @ 1.358%
  • 3-year +4.3 bps @ 1.673%
  • 5-year +4.3 bps @ 2.093%
  • 7-year +4.7 bps @ 2.389%
  • 10-year +4.4 bps @ 2.561%
  • 30-year +3.4 bps @ 3.155%

Yields are higher by as much as 5 basis points with the belly of the curve seeing the biggest impact. The benchmark 10-year yield is at its highest level since in more than two months, when it topped out at 2.64% about five weeks after Trump’s election victory.

Wednesday’s selling has caused bear flattening (Shorter-dated yields going up faster than longer-dated yields) along the yield curve with the 5-30-year spread pressing to 106 bps and holding near its flattest levels since September. A move below 105 bps will have the curve at its tightest level since 2007.

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