U.S. Treasuries Decline on Bets Jobs Report Will Add to Economy Optimism
Treasuries slipped, paring their monthly gain, before a report economists said may show U.S. employers added workers last month, fueling bets that yields are too low given the outlook for economic growth.
The yield on 10-year bonds are bound for a monthly drop that pushed them within 20 basis points of a record low. U.S. companies added 130,000 workers in November, up from 110,000 in October, according to a Bloomberg survey before a report by ADP Employer Services. The Conference Board’s index of consumer confidence jumped more than economists predicted in November, according a report yesterday. Euro-area finance ministers yesterday approved enhancements to the region’s bailout fund.
“The market is caught between a rock and hard place” amid the European sovereign-debt crisis and an economic recovery in the U.S., said Marc Ostwald, a strategist at Monument Securities Ltd. in London. “There are buyers on setbacks but there are not many buyers who will chase it through 2 percent yields on 10- year” securities, he said.
The 30-year yield increased two basis points, or 0.02 percentage point, to 2.98 percent at 7:05 a.m. New York time, according to Bloomberg Bond Trader prices. The 3.125 percent security due November 2041 lost 13/32, or $4.06 per $1,000 face amount, to 102 29/32.
Ten-year yields were little changed at 2 percent and have decreased about 11 basis points since Oct. 31 while Germany’s 10-year bund yield increased 27 basis points, set for the biggest advance since December 2010.
Demand for the perceived safety of U.S. government securities resulted in a 1.1 percent gain this month as of yesterday, based on Bank of America Merrill Lynch data. German debt lost 0.9 percent and Japanese bonds were little changed, the indexes show. The MSCI All Country World Index of stocks lost 6.6 percent this month.
Treasuries fluctuated the past three months as European leaders tried to convince investors that nations in the region will be able to pay their debts. The U.S. 10-year yield rose to 2.42 percent on Oct. 28, after reaching a record low 1.67 percent on Sept. 23.
“We still have a long, long way to go to settle the European debt problem,” said Tsutomu Komiya, one of the bond investors at Daiwa Asset Management Co. in Tokyo, which oversees the equivalent of $118.7 billion and is a unit of Japan’s second-biggest brokerage. “It will help keep yields down,” he said of U.S. Treasuries.
The Federal Reserve is scheduled to sell as much as $8.75 billion of Treasuries due 2013 today as part of a plan announced in September to replace $400 billion in shorter maturities with longer-term debt to cap borrowing costs.
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