US Treasury yields jump after ADP report

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US Treasury bond yields raced higher and the price of gold came under pressure as a stronger-than-expected ADP report on private sector jobs growth sealed expectations that the Federal Reserve will move to raise interest rates when it convenes next week.

The 10-year US government bond yield jumped as much as 5.4 basis points to a two-month high of 2.57 per cent, after ADP said US private employers added 298,000 jobs in February, smashing forecasts for a 189,000 rise.

Yield on the more policy sensitive 2-year note meanwhile rose as much as 4.6 basis points to 1.37 per cent – its highest level since June 2009.

Gold, a haven asset that offers no yield, sold off, with prices dropping 0.5 per cent to 1,210.40 a troy ounce.

The buck – as measured by the DXY index – tacked on 0.3 per cent to 102.08, as the prospect of higher interest rates in the US makes dollar-denominated assets more attractive.

Stock futures were little changed however. Futures are pointing to a flat opening for the three major indices.

Fed funds futures, meanwhile, went from setting a 98 per cent chance that the central bank will raise interest rates at next week’s meeting to 100 per cent after the report.

The odds of four rate hikes this year have gone from 16 per cent to nearly 19 per cent.

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