Rates are holding near yesterday's highs while equities move off overnight lows in the wake up another positive jobs from report from Automatic Data Processing.  The just-released ADP Private Employment Report said March employment grew by 201k, a decent gain in line with forecasts. The gain follows a 208k pickup in February (revised down from 217k)

"This month's [report] removes any remaining doubt that private nonfarm payroll employment accelerated heading into 2011," ADP said. "The increase of 201,000 is in line with the consensus expectation both for today's report and for Friday's jobs report from the Bureau of Labor Statistics."

The four-month average in job increases is now 211,000, which ADP called "consistent with a gradual if uneven decline in the unemployment rate." 

Those gains compare with just an average monthly gain of 74k over the previous four months (August through November.)

Trading of Treasuries was light in the overnight session. The benchmark 10-year note traded in a range of 3.48% and 3.51% after weakening four basis points to 3.49% on Wednesday. FNCL 4.5s are currently bid 1/32 better at 101-17, just below a key pivot at 101-20.  S&P 500 futures are 6.8 points higher at 1,323.30 but have been trending sideways for the past three days. Light crude is 0.22% to $104.56 per barrel while gold prices are up 0.85% to $1,428.00 per ounce.

Just prior to the ADP report we learned that the MBA's Mortgage Applications Index declined 7.5% in the week ending March 25. Refinances fell 10.1% from the previous week, while purchases decreased 1.7%. 

"Treasury and mortgage rates increased towards the end of last week, as global markets calmed following the recent crises in Japan and the Middle East," said Michael Fratantoni from MBA. "Refinance volume predictably fell in response to these rate increases. As rates climb back to 5%, fewer homeowners have both the incentive and the ability to refinance."

Key Events Today:

All that's left on the calendar is a QEII coupon lift, a trio of hawkish Fed speakers and a $29-billion 7-year note auction.

10:15 - QEII continues: Fed buys an estimated $5.5 - $7.5 billion in Treasury coupons maturing between 10/15/2013 and 02/28/2015.

1:30 -  Non-FOMC voter Thomas Hoenig speaks before an event hosted by the London School of Economics and Political Science

2:00 - Non-FOMC voter Jeffrey Lacker  testifies before House sub-committee

4:00 - Non-FOMC voter James Bullard speaks on "U.S. Monetary Policy and the Path to Normalization" before the UBS Macro Dinner

Treasury Auctions:

• 1:00 - $29-billion 7-Year Notes