By Wes Goodman June 10 (Bloomberg) -- Treasuries fell, erasing an advance from yesterday, as a larger-than-forecast jobs gain in Australia and an interest-rate increase in New Zealand indicated the global economy is improving. Longer-maturity debt led losses as the figures raised speculation demand will wane when the U.S. sells $13 billion of 30-year bonds today. Yields are near an eight-month low, driven down by investors seeking safety as a debt crisis in Europe spread last month. Reports today showed Chinese exports surged and Japan revised first-quarter growth higher, feeding optimism the global economy is weathering Europe’s fiscal woes. “Yields have fallen to unattractive levels,” said Tomohisa Fujiki, an interest-rate strategist in Tokyo at BNP Paribas Securities Japan Ltd., a unit of France’s largest bank by assets. “The U.S. economy is still growing.” The yield on the 30-year bond increased two basis points to 4.13 percent as of 7:04 a.m. in London, according to data compiled by Bloomberg. The 4.375 percent security due May 2040 declined 10/32, or $3.13 per $1,000 face amount, to 104 6/32. Treasuries have fluctuated between gains and losses all week. Ten-year yields advanced three basis points to 3.20 percent. They will climb to 3.84 percent by year-end, according to a Bloomberg survey of banks and securities companies with the most recent forecasts given the heaviest weightings. BNP Paribas, one of the 18 primary dealers that are required to bid at the government debt sales, predicts 3.75 percent. Extra Yield Investors demanded 93 basis points more yield to own 30- year bonds instead of 10-year debt, about one basis point, or 0.01 percentage point, shy of the most since March. Australian 10-year yields rose four basis points to 5.35 percent after a government report showed the nation added 26,900 workers in May. A Bloomberg News survey of economists projected an increase of 20,000. New Zealand’s three-year yield increased three basis points to 4.40 percent after Reserve Bank Governor Alan Bollard raised the benchmark interest rate for the first time in three years and indicated he plans to make further increases. China’s exports jumped 49 percent last month from a year earlier. Japan revised its first-quarter gross domestic product to an annualized 5 percent from 4.9 percent. Euro Gains Treasuries also slid as the euro rose for a third day and Asian stocks gained, curtailing demand for the relative safety of government debt. Europe’s currency will survive the region’s debt crisis, the head of China’s national pension fund said, according to a report by Reuters. Dai Xianglong, chairman of the National Council for Social Security Fund, also said China faces the risk of losses on its currency reserves because of growing debt in the U.S., according to the report. China is America’s largest creditor, holding $895.2 billion of the $7.96 trillion in marketable debt. RBC Capital Markets Corp., also a primary dealer, said the flight to U.S. debt may not be over. The euro fell to a four- year low against the dollar on June 7 on concern efforts to cut spending in Europe will slow the region’s economic growth. “Our expectation is that many international investors will continue to reallocate out of euro-denominated assets in favor of Treasuries,” analysts led by Tom Porcelli, U.S. market economist in New York, wrote to clients yesterday. “These investors have few other alternatives for safe investments.” 30-Year Bonds Thirty-year bonds, among the most sensitive to inflation because of their long maturities, have outperformed the rest of the U.S. debt market this year as the cost of living fell. The securities returned 11 percent, versus 4.6 percent for the broader market, according to Bank of America Merrill Lynch indexes. Thirty-year yields fell as low as 3.97 percent on May 25, the least since Oct. 8. They were sold at a yield of 4.49 percent at the previous auction of the securities a month ago. Bids last month amounted to 2.60 times the amount of debt on offer. The average for the past 10 auctions is 2.58. U.S. consumer prices dropped 0.1 percent in April, the first decrease since March 2009, the Labor Department said May 19. Excluding food and fuel, the so-called core rate was unchanged, capping the smallest 12-month gain in four decades. The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, was 1.96 percentage points. It has expanded from 1.83 percent on May 21, which was the least since October. Federal Reserve Chairman Ben S. Bernanke said yesterday the U.S. central bank will act as needed to aid financial stability and economic growth after restarting emergency currency-swaps to help contain Europe’s debt crisis. “Our ongoing international cooperation sends an important signal to global financial markets that we will take the actions necessary to ensure stability and continued economic recovery,” Bernanke said. To contact the reporters on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.

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