US Treasury debt recovered some ground on Wednesday after two sessions of steep losses, though investors were too skittish ahead of key jobs data to buy bonds wholeheartedly. Traders said market moves were mostly technical this week, reflecting a tug-of-war between bullish and bearish chart watchers rather than any fundamental shift in the outlook for Federal Reserve interest rate policy.
"Things that would ordinarily move the market are having only minimal impact," said Mary Ann Hurley, senior Treasuries trader in Seattle, Washington, for brokerage D.A. Davidson & Co "People are really just looking ahead to Friday's employment report."
Bonds stubbornly ignored a surprising jump in the Institute for Supply Management's services sector index for June and even a sizable increase in its employment component that boded well for Friday's payrolls report.
Benchmark 10-year notes moved very little since the start of trading and were up 9/32 in the afternoon for a yield of 4.07 percent, compared with 4.11 percent on Tuesday.
Yields have been stuck within a 20-basis-point band for over a month now, and there was a sense among investors that a rallying cry that emerged in March might have faded.
This shift was reflected in the latest J.P. Morgan client survey, which showed the number of long positions - bets on a future upturn in the market - had dropped to 5 percent from 8 percent in the latest week.
The share of bearish investors, those who said they shorted Treasuries, totalled 52 percent, up from 50 percent.
But bulls were not ready to throw in the towel just yet, particularly with oil prices touching a fresh record high above $61 a barrel.
Bond enthusiasts were still betting that once such a spike in costs filtered through to prices at gasoline stations, US consumers would have no option but to cut down on other purchases, thereby crimping economic growth.
This underlying belief may have helped 30-year bonds to climb 21/32 to yield 4.34 percent against 4.37 percent.
Five-year notes rose 4/32 to yield 3.87 percent, down from 3.90 percent.
Two-year debt was up just 1/32 and yielding 3.77 percent, compared with 3.79 percent on Tuesday.