Treasuries headed for their biggest weekly loss in a month as economists said a government report today will show U.S. employers hired 210,000 workers last month. Interest-rate swap spreads indicate increasing demand for yields higher than those on Treasuries. The difference between the two-year swap rate and the yield on U.S. debt of a similar maturity narrowed to 24 basis points today, the least in almost seven months. U.S. government bonds have dropped 0.5 percent this year, while corporate debt gained 3.2 percent, according to Bank of America Merrill Lynch indexes. “Yields will back up a little� in the Treasury market, said Ali Jalai, a bond trader in Singapore at Scotiabank, a unit of Bank of Nova Scotia (BNS), one of the 21 primary dealers that underwrite the U.S. debt. “I can’t see people buying before nonfarm payrolls. The labor market seems like it’s doing well.� Ten-year yields were unchanged at 2.01 percent as of 6:30 a.m. in London, according to Bloomberg Bond Trader prices. The 2 percent security maturing in February 2022 changed hands at 99 7/8. The rate has risen four basis points, or 0.04 percentage point, this week, the most since the period ended Feb. 10. It will be 2.5 percent by the middle of the year, Jalai said. Japan’s 10-year yield was unchanged today at 0.985 percent. It’s been in a range of 0.935 percent to 1.005 percent this year. U.S. payroll estimates in a Bloomberg News survey of economists ranged from an increase of 125,000 to 275,000 in February. January’s gain of 243,000 was the biggest since April, when employers took on 251,000 workers. The Labor Department is scheduled to report the data at 8:30 a.m. in Washington. Greek Debt Deal Treasuries fell yesterday as Greece’s debt-swap deadline passed with a majority of investors signaling their readiness to forgive some of the nation’s borrowings, boosting risk appetite and damping demand for the refuge of U.S. bonds. Greece’s government said today the participation rate in its swap of sovereign debt for new securities will reach 95.7 percent after it received approval to activate collective action clauses. U.S. 10-year notes yield about 22 basis points more than same maturity German bunds, the most since November. Debt Auctions Treasuries also fell yesterday as the government said it will sell $32 billion of three-year notes, $21 billion of 10- year debt and $13 billion of 30-year bonds next week. The auctions will take place over three days starting March 12. The Fed plans to sell as much as $8.75 billion of U.S. debt due from August 2013 to January 2014 today, according to the New York Fed’s website. The central bank is in the process of swapping $400 billion of shorter-maturity Treasuries in its holdings with longer-term bonds to cap borrowing costs. The Fed’s Open Market Committee is scheduled to hold a policy meeting on March 13. It said after its last meeting in January that it would keep the benchmark interest rate at almost zero through at least late 2014. The U.S. central bank has held its target for overnight lending in a range of zero to 0.25 percent since December 2008, during the last recession. The MSCI All Country World Index (MXWD) of stocks bottomed on March 9, 2009. It has returned 90 percent since then including reinvested dividends. Treasuries gained 15 percent in the period, the Bank of America indexes show. Ten-year yields, which have been in a range of 1.79 percent to 2.09 percent this year, will advance to 2.53 percent by Dec. 31, according to the average estimate of economists in a Bloomberg News survey, with the most recent forecasts given the heaviest weightings. 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