Treasuries were little changed, after rising yesterday, on speculation a government report today will show U.S. employers cut jobs for a 13th straight month. China, the largest foreign owner of U.S. government debt, will add to its holdings as it invests foreign-currency reserves, JPMorgan Chase & Co. said in a report today. Treasuries still headed for a third weekly decline because of concern investors will demand higher yields to buy a record $67 billion of notes and bonds that the U.S. plans to sell next week. “Yields will decline,” said Hiromasa Nakamura, senior investor in Tokyo at Mizuho Asset Management Co., which has $43.9 billion in assets. “Layoffs are rising. There’s no room for U.S. households to spend money, to consume.” Ten-year notes yielded 2.90 percent as of 1:29 p.m. in Tokyo, according to BGCantor Market Data. The 3.75 percent security due in November 2018 traded at a price of 107 6/32. The yield, which fell to a record low of 2.04 percent on Dec. 18, has averaged 4.28 percent for the past five years. The figure will slide to 2 percent by mid-year, Nakamura said. Treasuries gained for the first time in three days yesterday as a Labor Department report showed the number of Americans filing first-time claims for jobless benefits unexpectedly jumped last week to a 26-year high. The department’s monthly employment report today will show payrolls dropped by 540,000 in January, surpassing half a million job losses for a third month, according to a Bloomberg News survey of economists. ‘Get Cheaper’ “Treasuries will get cheaper going into next week, but it can’t happen until the employment numbers are out,” said Raymond Remy, a 26-year trader in New York who heads fixed income at Daiwa Securities America Inc., one of the 17 primary dealers that trade with the Federal Reserve. “All eyes will turn toward supply after that,” he said yesterday. The government plans to sell $32 billion in three-year notes on Feb. 10, $21 billion in 10-year debt the following day and $14 billion in 30-year bonds on Feb. 12. The package is known as the quarterly refunding. The U.S. also said it plans to auction seven-year notes for the first time since 1993. Investors began to speculate that Chinese demand for Treasuries would wane after exports from the nation declined in November and December, which may curtail the amount of funds flowing into the country. China owns $681.9 billion of the $5.75 trillion in U.S. marketable debt, Treasury Department data show. China has been buying to invest its $1.95 trillion in foreign reserves, the world’s biggest, and that won’t stop, JPMorgan analysts led by Frank Gong in Hong Kong wrote in their report today. No Alternative China will buy “not only for the near-term stability of the global financial system, but also because there is no viable and liquid enough alternative market in which to invest China’s massive and still growing reserves,” the analysts said. The U.S. is depending on investors from outside the nation, who own more than half of its marketable debt, as it borrows record amounts to combat the recession. The Treasury on Feb. 2. said it would borrow $493 billion this quarter, 34 percent more than initially projected. “The refunding next week will be the biggest ever, and that will continue for a couple of years,” said Kazuaki Oh’e, a debt salesman in Tokyo at CIBC World Markets Japan Inc., part of Canada’s fifth-biggest bank. “This is terrible for the market.” Monthly Loss Treasuries lost 0.1 percent so far this month, after a 3.1 percent decline in January that was the most in almost five years, according to Merrill Lynch & Co. indexes. Notes fell as President Barack Obama lobbied lawmakers to pass his economic plan, which may cost about $900 billion. The Fed’s holdings of Treasuries on behalf of foreign entities including central banks fell for the first time in almost six months, declining by 0.14 percent to $1.735 trillion for the week ended Feb. 4, the central bank said in a report yesterday. Tight credit will probably prevent the U.S. economy from emerging from recession through June, Federal Reserve Bank of Minneapolis President Gary Stern said in a speech in St. Paul, Minnesota, yesterday. Stern does not vote on monetary policy this year. In Japan, Toyota Motor Corp., the world’s largest carmaker, lost its top credit rating from Moody’s Investors Service, because of plunging demand for cars in the U.S. and Japan. Mortgage Rates Yields indicate Fed Chairman Ben S. Bernanke and his fellow policy makers have yet to thaw private debt markets after cutting the benchmark interest rate to a range of zero to 0.25 percent and pumping money into the financial system. Average 30-year fixed mortgage rates climbed to 5.25 percent in the seven days ended Feb. 5 from 4.96 percent three weeks earlier, according to loan finance company Freddie Mac. Rates are about 2.35 percentage points higher than 10-year Treasury yields, increasing from 1.64 percentage points five years ago. The London interbank offered rate, or Libor, for three- month dollar loans, rose to 1.24 percent yesterday from 1.08 percent on Jan. 14. It slid from 4.82 percent in October, which it reached after Lehman Brothers Holdings Inc. folded in September. The difference between what banks and the Treasury pay to borrow for three months, the so-called TED spread, narrowed to 0.97 percentage point from 4.64 percentage points in October. The gap averaged 0.27 percentage point from 2002 through 2006, before the credit crisis began in 2007.

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