By Min Zeng
U.S. government bonds rose on Wednesday for the first time this
week as a disappointing labor-market report boosted demand for
haven assets.
Private payrolls in the U.S. added 212,000 jobs in February,
according to the national employment report compiled by payroll
processor Automatic Data Processing Inc. and forecasting firm
Moody's Analytics. Economists polled by The Wall Street Journal had
expected an increase of 215,000.
Comments from a top Federal Reserve official added to the bond
market's strength.
Raising short-term official interest rates off currently near
zero levels this year would be a mistake, Federal Reserve Bank of
Chicago President Charles Evans said Wednesday. Mr. Evans. who
votes this year on interest-rate policy, said inflation is unlikely
to rise to the Fed's 2% target until 2018, supporting his case for
patience.
Buyers stepped in after the selloff of the last two sessions
that had sent bond yields close to the highest level this year.
U.S. bonds offer superior yields in the developed world; investors
continue to struggle to find bonds that offer a mix of safety and
income at a time when many eurozone government bonds yields are
below zero, driven by ultra-loose monetary policy in Europe and
deflation concerns.
"People wanted to add bonds, but they were waiting for the
event-risk of this employment data to pass," said Ian Lyngen,
senior government bond strategist at CRT Capital Group LLC.
In recent trading, the yield on the benchmark 10-year Treasury
note was 2.098%, compared with 2.122% Tuesday, according to
Tradeweb.
Yields fall as bond prices rise.
Treasury bonds sold off in the past two days, hurt by a flurry
of new corporate bond issuance. The U.S. government debt market
sold off in February, a setback from a steep price rally since the
start of 2014.
Concerns about the Fed potentially raising rates in June rattled
the Treasury market last month. The 10-year note's yield increased
by about 0.32 percentage point in February after falling nearly
half of a percentage point in January.
Fed Chairwoman Janet Yellen said last week that the timing of
any rate increase hinges on how the economy performs going
forward.
Investors will zero in on Friday's nonfarm jobs report, the key
U.S. data point before the Fed's next interest-rate policy meeting
on March 17-18.
Economists polled by The Wall Street Journal expect 240,000 new
jobs were added last month, after a 257,000 net increase in
January. The unemployment rate is forecast to have fallen to 5.6%
from 5.7% in January. Average hourly earnings, a main gauge of wage
inflation, is expected to have posted a 0.2% gain after a rise of
0.5% in January.
Write to Min Zeng at min.zeng@wsj.com