Treasuries rose, pushing benchmark yields to 15 basis points from the record low, before reports today and tomorrow that economists said will show the U.S. is struggling to add jobs. The Federal Reserve plans to buy as much as $5.5 billion of U.S. government securities due from August 2020 to May 2022 today as part of its effort to support the economy by reducing long-term interest rates, according to the Fed Bank of New York’s website. The economy is “slowing markedly,� Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., wrote on Twitter July 3. “There’s a lot of support for Treasuries,� said Tomohisa Fujiki, an interest-rate strategist at BNP Paribas Securities Japan Ltd. in Tokyo. “Jobs growth is sluggish. The pace of recovery seems to be slowing.� BNP is one of the 21 primary dealers that trade directly with the Fed. Benchmark 10-year yields declined four basis points, or 0.04 percentage point, to 1.59 percent as of 12:46 p.m. in Tokyo, according to Bloomberg Bond Trader data. The record low was 1.44 percent set June 1. The 1.75 percent note due in May 2022 rose 11/32, or $3.44 per $1,000 face amount, to 101 14/32. Trading of Treasuries opened in Asia after being closed worldwide yesterday for Independence Day in the U.S. The MSCI Asia Pacific Index (MXAP) of stocks slid 0.4 percent, ending a six-day rally and spurring demand for the relative safety of U.S. debt. Japan’s 10-year rate was unchanged at 0.815 percent, versus this year’s low of 0.79 percent set June 4. ADP, Labor The U.S. added 90,000 jobs in June and the jobless rate held at 8.2 percent, based on Bloomberg News surveys of economists before the Labor Department reports the figures tomorrow. It would be the third month that the economy created fewer than 100,000 positions. Yields slid to a record following the prior employment report on June 1, when the Labor Department said payrolls grew by 69,000, the smallest gain in a year. ADP Employer Services, which compiles a private report on payrolls, will say today that U.S. employment growth slowed to 100,000 in June from 133,000 in May, a separate survey showed. Government figures today will show there were 385,000 first-time claims for unemployment benefits last week, versus the average of 395,600 for the past decade. Pimco is avoiding the debt of nations including Spain and Portugal in favor of U.S. Treasuries and mortgage securities, Gross, who runs the world’s biggest bond fund, said June 29 in a radio interview on “Bloomberg Surveillance� with Tom Keene and Ken Prewitt. Fed Stimulus The Fed on June 20 expanded so-called Operation Twist, its program to replace $400 billion of short-term Treasuries in its portfolio with longer-term debt to lengthen the average maturity of its holdings, by $267 billion and extended it until year-end. ECB officials will cut their main interest rate by a quarter percentage point to a record 0.75 percent today, a Bloomberg survey of economists shows. The Bank of England will expand its bond-purchase program today, the surveys show. Declining costs in the U.S. economy mean 10-year Treasury rates are approaching the rate of inflation after 13 months of so-called negative real yields. Consumer prices rose at an annual rate of 1.7 percent in May, dropping from 3.9 percent in September. The real 10-year yield was negative 11 basis points. The deficit was as much as negative 2.11 percentage points in October. Inflation Spread The difference between yields on 10-year notes and same- maturity Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, was 2.11 percentage points. The average over the past decade is 2.15 percentage points. The Treasury is scheduled to announce today the sizes of three auctions scheduled for next week. The U.S. will sell $32 billion of three-year notes, $21 billion of 10-year securities and $13 billion of the 30-year bonds over three days starting on July 10, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey. The government sells this combination of securities every month as part of its auction schedule. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

Source