Treasuries rose for a fourth day after figures showed China’s non-manufacturing industries expanded at a slower pace and economists said a report later today will indicate a similar slump in the U.S. Benchmark 10-year yields were within a quarter percentage point of the record low on speculation other data this week will signal the U.S. labor market is deteriorating. Europe is the biggest risk to global markets, said Ramin Toloui, the co-head of emerging markets portfolio management at Pacific Investment Management Co. President Barack Obama and Republican challenger Mitt Romney will debate economic policy in Denver today. “We’re relatively positive on U.S. Treasuries,� said Hajime Nagata, who helps oversee the equivalent of $131.8 billion as an investor in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co., Japan’s second-biggest life insurer. “The global economy is not good.� The yield on benchmark 10-year notes fell two basis points, or 0.02 percentage point, to 1.60 percent as of 7:05 a.m. in London, based on Bloomberg Bond Trader data. The price of the 1.625 percent security due in August 2022 gained 5/32, or $1.56 per $1,000 face amount, to 100 7/32. The all-time low rate was 1.38 percent on July 25. Treasuries are becoming more expensive, based on the 10- year term premium, a model created by economists at the Fed that includes expectations for interest rates, growth and inflation. The gauge fell to negative 0.95 percent, approaching the record low of negative 1.02 percent on July 24. A negative reading indicates investors are willing to accept yields below what’s considered fair value. Japan’s 10-year rate rose a 1/2 basis point to 0.76 percent, increasing for the first time in two weeks. Services Index The purchasing managers’ index from the Chinese government and logistics federation fell to 53.7 in September from 56.3 the previous month. Readings above 50 indicate expansion. The Institute for Supply Management’s non-manufacturing index for the U.S., which covers almost 90 percent of the economy, probably declined to 53.4 last month from 53.7 in August, according to the median forecast of 77 economists in a Bloomberg News survey. The Tempe, Arizona-based group’s index, which measures industries from utilities and retailing to health care, housing and finance, is due at 10 a.m. New York time. A report from ADP Employer Services at 8:15 a.m. in New York may show companies added fewer workers, economists said. Employment Data The U.S. jobless rate probably rose to 8.2 percent last month from 8.1 percent in August, according to the median forecast of 82 economists surveyed by Bloomberg before the Labor Department issues the figure on Oct. 5. Payrolls increased by 115,000 in September, according to a separate survey. The Federal Reserve is buying $40 billion of mortgage bonds a month and it pledged to hold the federal funds rate near zero at least through mid-2015 to support the economy. The central bank is also swapping shorter-term Treasuries in its holdings with those due in 6 to 30 years. It plans to purchase as much as $5.25 billion of debt maturing from October 2018 to August 2020 today as part of the program, according to Fed Bank of New York’s website. Global economic fundamentals are weak, Pimco’s Toloui, who is based in Singapore, said in an interview today with Haslinda Amin on Bloomberg Television. Treasuries rose yesterday after Spanish Prime Minister Mariano Rajoy said he has no plans to request a bailout soon, maintaining demand for the relative safety of U.S. debt. Refuge Assets Bill Gross, who runs the world’s biggest bond fund at Pimco, said the U.S. will no longer be first destination of global capital in search of safe returns unless the gap between spending and debt is addressed, in his monthly outlook yesterday on the company’s website. Pimco, which is based in Newport Beach, California, and is a unit of the Munich-based insurer Allianz SE (ALV), managed $1.82 trillion of assets as of June 30. The presidential debate at the University of Denver is scheduled to start at 7 p.m. local time, according to the school’s website. Record-low yields are proving no deterrent to buyers, aiding the government in its efforts to borrow as total public debt outstanding rises above $16 trillion. U.S. debt securities held by domestic buyers, excluding the Fed, rose 10.7 percent in the first seven months of this year to $3.61 trillion, compared with a 6.9 percent increase for countries from China to Germany, according to data from the Treasury Department and compiled by Bloomberg. 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.

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