By Cordell Eddings and Anchalee Worrachate April 1 (Bloomberg) -- Treasury 10-year notes fell for the first time in three days as a report showed initial jobless claims dropped and analysts predicted the U.S. will sell $82.2 billion of notes and bonds next week. The yield was within 0.08 percentage point of its highest level since June before tomorrow payroll report, forecast to show employers added the most jobs in three years. Next week’s debt sales, to be announced today, will include a record-tying $40 billion three-year note sale, according to the average forecast of nine primary dealers in a Bloomberg News survey. “The labor markets are showing proof of finally starting to turn positive,” said Guy Lebas, chief fixed-income strategist and economist at Janney Montgomery Scott LLC in Philadelphia. “From here it will be a waiting game until tomorrow’s nonfarm payrolls report. The market doesn’t want to take any big bets right now.” The 10-year note yield climbed 2 basis points, or 0.02 percentage point, to 3.85 percent at 8:45 a.m. in New York, according to BGCantor Market Data. The price of the 3.625 percent security due in February 2020 fell 1/8, or $1.25 per $1,000 face amount, to 98 5/32. Yields climbed on March 25 to 3.92 percent, the highest level since June 11. Treasuries handed investors a 0.9 percent loss in March, the first monthly drop in 2010, indexes compiled by Bank of America Corp.’s Merrill Lynch unit show. U.S. Debt Sales Next week’s U.S. debt sales will also include $8.2 billion in 10-year Treasury Inflation Protected Securities, $21 billion in 10-year notes and $13 billion in 30-year bonds, according to the survey of primary dealers, which are obliged to participate in Treasury auctions. The auctions will take place over four days starting with the TIPS sale on April 5. Investors are demanding higher returns as the administration of President Barack Obama attempts to sustain economic growth with record borrowing. The budget deficit, which rose to $1.4 trillion in fiscal 2009, will drive Treasury sales to a record $2.43 trillion this year, a February survey of bond- trading companies showed. Treasuries fell last week after the government’s three note auctions attracted lower-than-average demand. The budget deficit, which rose to $1.4 trillion in fiscal 2009, will drive Treasury sales to a record $2.43 trillion this year, a February survey of bond-trading companies showed. First-time jobless applications decreased in the week ended March 27 to 439,000 from 445,000 in the previous week, Labor Department figures showed today. The median forecast of 46 economists in a Bloomberg News survey was for a drop to 440,000 from a previously reported 442,000. The Labor Department will report tomorrow that employers added 182,000 jobs after a drop of 36,000 in February, according to the median forecast of 81 economists in a Bloomberg News survey. The jobless rate probably held at 9.7 percent, according to analysts. To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Anchalee Worrachate in London at aworrachate@bloomberg.net

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