LONDON, April 4 (Reuters) - U.S. 10-year Treasury debt yields flirted near three-month lows on Thursday after tepid private sector jobs data dampened expectations for strong figures from Friday’s more comprehensive labour market report.
A separate report on Wednesday by the Institute for Supply Management showing growth in the U.S. services sector slowed in March to the lowest level in seven months also prompted demand for low-risk U.S. government bonds.
The benchmark 10-year yield was last at 1.816 percent, unchanged from late U.S. trading but still within sight of Wednesday’s low near 1.797 percent, its lowest since early January.
Analysts said the market was now positioned for a softer figure for non-farm payrolls on Friday after private payrolls processor ADP said U.S. private sector employers added 158,000 jobs in March, short of economists’ expectations for 200,000.
U.S. jobs data on Friday is expected to show a rise in non-farm payrolls of 200,000 in March, according to a Reuters poll that was conducted before release of the ADP survey.
“People are paring down risk ahead of payrolls as revisions are coming into the market of a worse payroll number,” said Craig Collins, a trader at Bank of Montreal in London.
“After yesterday’s number, people are making their new expectations closer to 150,000-160,000 and I think that if we get a number above 200,000 that would hit the market back. Other than that, people are looking for a disappointing number, that’s why rates are low.”
Investors would also be focused on the European Central Bank policy meeting later on Thursday and what measures the bank might take to ease lingering worries about the euro zone. Concerns include a draconian Cyprus bailout and political uncertainty in Italy more than a month after inconclusive elections.
The ECB is expected to keep its main refinancing rate unchanged at a record low 0.75 percent but market participants are looking for hints that further monetary policy easing is on the cards to kick start the region’s economy. Eurozone Services PMI data earlier on Thursday showed a continued contraction in the sector in March, heaping more pressure on the central bank.