Treasuries Close Roughly Flat Following Choppy Trading Day

Markets

Treasuries showed a lack of direction over the course of the trading session on Wednesday before ending the day roughly flat.

Bond prices recovered from an initial move to the downside but pulled back near the unchanged line going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.524 percent.

The roughly flat close by treasuries came after Senate Minority Leader Mitch McConnell, R-Ken., offered to allow a temporary extension of the debt limit.

In a statement, McConnell said Republicans would allow Democrats to “use normal procedures to pass an emergency debt limit extension at a fixed dollar amount to cover current spending levels into December.”

“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation,” McConnell said.

He added, “Alternatively, if Democrats abandon their efforts to ram through another historically reckless taxing and spending spree that will hurt families and help China, a more traditional bipartisan governing conversation could be possible.”

The offer from McConnell comes as lawmakers are facing an October 18th deadline to raise the debt limit and avoid a potential default.

On the U.S. economic front, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of September.

ADP said private sector employment jumped by 568,000 jobs in September after rising by a downwardly revised 340,000 jobs in August.

Economists had expected private sector employment to climb by 428,000 jobs compared to the addition of 374,000 jobs originally reported for the previous month.

On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report, which includes both public and private sector jobs.

Economists currently expect employment to increase by 488,000 jobs in September after rising by 235,000 jobs in August. The unemployment rate is expected to dip to 5.1 percent from 5.2 percent.

A report on weekly jobless claims may attract some attention on Thursday, although trading activity may be somewhat subdued ahead of the monthly jobs report.

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