NEW YORK (CNN/Money) -
Treasury prices slipped Wednesday as surprisingly strong figures on the titanic services sector suggested the labor market was stabilizing.
Just after 5:15 p.m. ET, the two-year note fell 5/32 of a point in price to 99-13/32 with a yield of 1.93 percent, and the five-year note shed 11/32 of a point to 99-2/32 to yield 3.34 percent.
At the longer end, the benchmark 10-year note dropped 7/16 of a point to 99-5/32, pushing its yield up to 4.35 percent from 4.29 percent late Tuesday. The 30-year bond fell 13/16 of a point to 102-23/32 with a yield of 5.19 percent, up from 5.13 percent late Tuesday.
The dollar rose modestly in afternoon trade. The greenback bought ¥109.86, up from ¥109.58 yesterday, and the euro purchased $1.1439, down from $1.1495 late Tuesday.
Activity in the U.S. service sector accelerated in October, the nation's purchasing managers said Wednesday, beating analysts' expectations.
The Institute for Supply Management's index of non-manufacturing activity came in at 64.7, compared with 63.3 in September. Any reading above 50 indicates growth in the sector. Economists, on average, expected a reading of 63.4, according to Briefing.com.
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.
Separately, the Commerce Department said orders for goods made in U.S. factories rose 0.5 percent in September.
Bonds also took a beating from news that the Reserve Bank of Australia raised rates 0.25 point to 5.00 percent on Wednesday, its first hike in 17 months.
Typically the market plays little attention to what happens Down Under, but the Bank of England is also expected to raise rates this week, so there is much chatter about the start of a global tightening cycle.
"The market is focusing on the general idea that rates will be going up," a trader in London said. "Nobody expects the ECB to do anything for a long time, but still, it changes the atmosphere from the investors' point of view."
The Fed's own thinking may be a bit clearer after Federal Reserve Chairman Alan Greenspan talks on Thursday at 10:00 a.m. ET to the Securities Industry Association annual meeting in Boca Raton, Fla. Analysts assume he will have to acknowledge the recent marked improvement in economic data but could balance that with caution on the employment outlook.
Analysts were also keenly awaiting Friday's October payrolls report for clues to the true state of U.S. employment. They are eager to find out whether last month's job gains were an anomaly or the start of a broader trend.
Economists forecast that the economy added 65,000 jobs in October, according to Briefing.com, against a 57,000 gain in September. The unemployment rate is expected to hold steady at 6.1 percent.
-- from staff and wires reports
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