NEW YORK (CNN/Money) -
Treasury prices fell Wednesday after a survey of nation's services industry revealed record strength, but a modest decline in job growth within the sector capped losses.
The service sector is the economy's biggest employer, and service activity -- including banking, tourism, entertainment and more -- makes up about 80 percent of the total economy.
At around 3:55 p.m. ET, the benchmark 10-year note slid 7/32 to 100-31/32 to yield 4.13 percent, up from 4.09 percent late Tuesday. The 30-year bond fell 8/32 to 106-even for a yield of 4.97 percent, up from 4.95 late yesterday.
The two-year note remained dipped 1/32 to 100-6/32 with a yield of 1.77 percent, and the five-year lost 5/32 to 100-18/32 to yield 3.13 percent.
The Institute for Supply Management's index of non-manufacturing activity came in at 65.7, compared with a revised 58 in December. Any reading above 50 indicates growth in the sector.
It was the highest reading for the index since the ISM started keeping track of service-sector activity in July 1997. Economists, on average, expected a reading of 60, according to Briefing.com.
Bonds had a relatively muted reaction to the Treasury's announcement that it planned to borrow $56 billion in next week's quarterly refunding splurge, though the prospect of absorbing that new debt was certainly not comforting.
That was a billion dollars less than generally expected, but still a drop in the ocean given a total borrowing need this quarter of $177 billion.
In all, the Treasury will sell $24 billion in three-year paper, $16 billion in five's and $16 billion of 10-year notes, with only the last being lower than November's refunding.
In the currency market, meanwhile, the dollar seeped lower versus the yen as traders focused on the upcoming Group of Seven finance minister's meeting, scheduled Feb. 6-7 in Boca Raton, Florida.
"Traders are marking time ahead of the G7 finance ministers meeting on Friday. I think there is still a significant amount of event risk and that is tending to temper the dollar's movement," Alex Beuzelin, a senior foreign exchange analyst at Ruesch International in Washington D.C., told Reuters.
"No one wants to put on any extended position," he added.
The euro purchased $1.2533, unchanged from late Tuesday. Against the yen, the dollar dropped marginally to ¥105.44 from ¥105.52 late Tuesday.
Caution is also looming ahead of a key U.S. jobs report on Friday. Non-farm payrolls, forecast to rise 150,000 in January compared with just 1,000 in the previous month, are closely eyed as an improving labor market could hold the key to the timing of a rate hike in the United States.
Strong U.S. economic data boosted the dollar earlier in the session, but gains were offset by worries about the labor sector.
--from staff and wire reports
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