Sept. 9 (Bloomberg) -- Treasuries fell after a government report showed initial jobless claims dropped last week more than economists forecast, spurring demand for higher-yielding assets. Thirty-year bonds slid before the government’s $13 billion auction of the securities. Soaring issuance of corporate debt pushed investment-grade yields to 3.87 percent, close to the Aug. 24 level that was the lowest since at least October 1986, according to a Bank of America Merrill Lynch index. “We are in the midst of a heavy week in supply in Treasuries and corporates, which is weighing on the market,” said Martin Mitchell, head government bond trader in Baltimore at Stifel Nicolaus & Co., a brokerage firm. “The market seems to want to correct lower. The data shows a better picture in the labor sector.” The yield on the 10-year note climbed 5 basis points, or 0.05 percentage point, to 2.71 percent at 10:35 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 dropped 15/32, or $4.69 per $1,000 face amount, to 99 1/4. The 2-year note’s yield rose 2 basis points to 0.54 percent after falling on Aug. 24 to the all-time low of 0.4542 percent. The 30-year bond yield gained 6 basis points to 3.79 percent. The Standard & Poor’s 500 Index rallied on the jobs report as much as 1 percent to 1,110.27, its highest level on an intraday basis since Aug. 11. Crude oil for October delivery gained 1.3 percent to $75.64 a barrel. Jobless Claims Initial jobless claims fell to 451,000 in the week ended Sept. 4 from a revised 478,000 in the prior period, the Labor Department reported. The median forecast of 46 economists in a Bloomberg News survey was for a decrease to 470,000 from a previously reported 472,000. Treasuries slumped on Sept. 3 after Labor Department figures showed U.S. companies hired more workers last month than economists predicted. The 30-year bonds being sold today yielded 3.797 percent in pre-auction trading, compared with a yield of 3.954 percent at the previous offering on Aug. 12. Investors bid last month for 2.77 times the amount of debt on offer, compared with 2.89 in July. Indirect bidders, the investor group that includes foreign central banks, bought 46 percent of the securities, versus 37.4 percent in July. “The bond auction is today’s focus,” Thomas L. di Galoma, head of U.S. rates trading in New York at Guggenheim Partners LLC, a brokerage for institutional investors, wrote in a note to clients. “We continue to see a buying opportunity as 10-year rates back up.” U.S. Auctions Today’s auction is the third of three note and bond offerings this week totaling $67 billion, the smallest combination for 3-, 10- and 30-year securities since July 2009. Indirect bidders purchased 54.7 percent of the $21 billion in 10-year notes sold yesterday, the highest share since September 2009. The class bought 42.4 percent of the $33 billion in three-year notes sold on Sept. 7, the most since June. The U.S. trade deficit narrowed in July more than forecast as imports fell and exports climbed to the highest level in almost two years. The gap shrank 14 percent, the most since February 2009, to $42.8 billion, Commerce Department figures showed today. Economists forecast a deficit of $47 billion, according to the median of 73 projections in a Bloomberg News survey. Imports fell 2.1 percent, while exports increased 1.8 percent to $153.3 billion, the highest since August 2008. Global Economic View The global economic recovery is proving slower than projected, and policy makers may need to extend or bolster stimulus programs to support it, the Organization for Economic Cooperation and Development said. Recent data suggest the economy of the Group of Seven nations could grow at an annualized rate of about 1.5 percent in the second half, below the 1.7 percent previously envisaged and the 3 percent rate of the first six months of the year, the Paris-based organization said today. Treasuries rallied on Aug. 10, when the Federal Reserve said at the conclusion of its policy meeting that it would keep its bond holdings level by resuming the purchase of U.S. debt to support a recovery it described as weaker than earlier anticipated. --With assistance from Lukanyo Mnyanda in London. Editors: Dennis Fitzgerald, Greg Storey To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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