Treasuries fell, pushing 10-year yields up from a record low, as speculation Irish voters will support measures to contain the debt crisis and gains in Spanish bonds damped demand for the safety of U.S. debt. U.S. government securities pared a second monthly advance before reports today and tomorrow forecast to show job growth in the world’s biggest economy picked up in May. Treasury yields also climbed after a technical indicator signaled their recent decline was poised to end. U.S. debt has returned 1.6 percent this month, according to indexes compiled by Bank of America Merrill Lynch. The MSCI All-Country World Index of shares slid 8.7 percent in the same period. “Some positive news and gains in stocks might have triggered profit taking on haven assets including Treasuries, whose decline in yields has been excessive,� said Marc Ostwald, a fixed-income strategist at Monument Securities Ltd. in London. “Treasuries yields have been distorted to levels not consistent with its economic data.� The benchmark 10-year yield rose one basis point, or 0.01 percentage point, to 1.63 percent at 7:29 a.m. New York time. The 1.75 percent security maturing in May 2022 dropped 3/32, or 94 cents per $1,000 face amount, to 101 2/32. The yield earlier declined to a record 1.5933 percent. Irish citizens vote today on the European Union’s latest treaty with polls indicating they will endorse measures designed to ease the region’s debt crisis. The surveys show supporters of the Fiscal Stability Treaty lead by about 18 percentage points even as doubts grow about the viability of the euro region. Spanish Bonds While opponents of European austerity such as Nobel laureate economist Paul Krugman are urging the Irish to reject it, the government’s argument that the treaty is needed to win future bailout funds is carrying more weight. Spanish 10-year bond yields dropped 17 basis points to 6.48 percent after rising to 6.70 percent yesterday, the highest level since Nov. 28. The Stoxx Europe 600 Index (SXXP) of shares gained 0.5 percent. The 14-day relative-strength index for 10-year Treasury yields fell to 28.5 yesterday. A reading less than 30 suggests to some traders that rates have declined too quickly and are set to change direction. U.S. companies hired 150,000 workers this month, after adding 119,000 in April, according to a Bloomberg News survey before the report from ADP Employer Services today. Economists estimate a Labor Department report tomorrow will show the U.S. added 150,000 jobs in May, up from 115,000 the previous month. The jobless rate held at 8.1 percent, a separate survey showed. Fed Purchases The central bank plans to buy as much as $2 billion of Treasuries due from February 2036 to May 2042 today as part of the plan to replace $400 billion of shorter-term debt in its holdings with longer maturities, according to the Fed Bank of New York’s website. The Fed previously expanded its balance sheet by $2.3 trillion in two rounds of bond purchases. Fed policy makers are scheduled to meet in Washington on June 19-20 to consider what to do when the $400 billion maturity-extension program expires in June. Treasuries underperformed German bonds and U.K. gilts this month, according to the Bank of America Merrill Lynch indexes. German debt made a 2.8 percent profit and gilts returned 3.7 percent, the indexes show. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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