By Susanne Walker Aug. 5 (Bloomberg) -- Treasuries rose for the first time in three days after U.S. service industries unexpectedly contracted at a faster pace in July, suggesting recovery from the deepest recession since the Great Depression may be slow. Ten-year note yields declined as the Institute for Supply Management’s index of non-manufacturing businesses, which make up almost 90 percent of the economy, fell to 46.4, more than forecast, from 47 in June. Government securities dropped earlier after the U.S. announced it will sell a record $75 billion at next week’s quarterly auctions of notes and bonds and indicated plans to expand issuance of inflation-indexed securities. “The ISM number was not as strong as people had anticipated, so it provided a bullish tone in Treasuries,” said Alex Li, an interest-rate strategist in New York at Credit Suisse Securities USA LLC, one of 18 primary dealers that trade with the Federal Reserve. “The economy has gone through its worst phase after the crisis, but the pace of the recovery will probably be slow.” The yield on the 10-year note fell four basis points, or 0.03 percentage point, to 3.65 percent at 10:20 a.m. in New York, according to BGCantor Market Data. The yield earlier touched as high as 3.76 percent. The 3.125 percent security maturing in May 2019 rose 9/32, or $2.81 per $1,000 face amount, to 95 23/32. To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net.

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