Treasury yields rose broadly on Wednesday following the release of U.S. strong data, while the U.S.' top court signaled skepticism around the legality of the Trump administration's tariffs.
The 10-year Treasury yield traded more than 6 basis points higher at 4.159%. The 2-year note yield climbed 5 basis points to 3.634%. The 30-year bond yield also advanced more than 6 basis points to 4.74%.
One basis point equals 0.01% and yields and prices move in opposite directions.
The Institute for Supply Management reported that its services index moved up to 52.4% from the 50% seen in September. The figure was above the 50.5% that economists polled by Dow Jones had estimated.
The benchmark 10-year yield in particular also got a boost after ADP's October survey of private sector payrolls showed an increase of 42,000, above the Dow Jones forecast for a 22,000 gain. The data signified a reversal from the 29,000 decline seen in September.
"The delay between job cuts from the big companies (Meta, Amazon, UPS) announced the last couple weeks [were] likely not accounted for in today's release," said John Luke Tyner, head of fixed income and portfolio manager at Aptus Capital Advisors. "I presume these will show up in the next couple of reports. Once the [government] reopens we should see more clarity on the true picture of employment but there are of course worries the actual picture is worse than today's report alluded to."
Economic data is sparse as the government shutdown becomes the longest in U.S. history, reaching 36 days and surpassing the previous record of 35 days, from late 2018 and early 2019.
Yields to another leg higher around midday in New York after U.S. Supreme Court justices seemed skeptical that tariffs imposed by President Donald Trump are legal.
Justice Sonia Sotomayor, one of the three liberal judges on the court, told Solicitor General D. John Sauer: "You say tariffs are not taxes, but that's exactly what they are."
"They're generating money from American citizens, revenue," Sotomayor said.
If the court rules against the administration, the White House may be forced to return the money already collected from the levies. That revenue has eased investor concerns around the country's deficit. If the money is returned it could send Treasury yields higher and prices lower.
"If the Supreme Court upholds the earlier decisions, it would impact many of the tariffs imposed this year, with implications for government revenue, though the administration may look to replace these using other statutes," the Deutsche Bank analysts said.