After ending the previous session roughly flat, treasuries moved moderately higher over the course of the trading day on Thursday.
Bond prices moved to the upside early in the session and remained in positive territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.3 basis points to 2.879 percent.
The strength among treasuries came following the release of a slew of U.S. economic data, including a report from payroll processor ADP showing private sector employment rose by less than expected in the month of August.
ADP said private sector employment climbed by 163,000 jobs in August after jumping by a revised 217,000 jobs in July. Economists had expected an increase of about 190,000 jobs.
“Although we saw a small slowdown in job growth the market remains incredibly dynamic,” said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute.
On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.
The report is expected to show employment increased by about 191,000 jobs in August after rising by 157,000 jobs in July. The unemployment rate is expected to dip to 3.8 percent from 3.9 percent.
In other economic news, the Institute for Supply Management released a report showing a much bigger than expected acceleration in the pace of growth in U.S. service sector activity in August.
The ISM said its non-manufacturing index jumped to 58.5 in August from 55.7 in July, with a reading above 50 indicating growth in the service sector. Economists had expected the index to inch up to 56.8.
“There was a strong rebound for the non-manufacturing sector in August after growth ‘cooled off’ in July,” said Anthony Nieves, Chair of the ISM Non-Manufacturing Business Survey Committee.
“Logistics, tariffs and employment resources continue to have an impact on many of the respective industries,” he added. “Overall, the respondents remain positive about business conditions and the economy.”
Traders also kept an eye out for developments regarding trade, as U.S. and Canadian officials continue to hold talks on reforming NAFTA.
Meanwhile, President Donald Trump purportedly intends to impose tariffs on another $200 billion worth of Chinese goods as soon as the end of a public comment period at midnight.
China’s Commerce Ministry has warned it will be forced to roll out necessary retaliatory measures if the U.S. adopts any new tariffs.
The monthly jobs report is likely to be in the spotlight on Friday, although news regarding the tariffs on Chinese imports could also impact trading.