Treasuries rose, with 10-year yields approaching the lowest level in a week, as a decline in stocks around the world increased demand for the relative safety of U.S. government securities. Treasuries, benchmarks for company and sovereign borrowing costs around the world, have eked out a 0.1 percent gain in June as of yesterday, according to Bank of America Merrill Lynch indexes. Investors are weighing whether the Federal Reserve will curb its bond purchases, known as quantitative easing, this year as the economy expands. Economists say an industry report today will show U.S. companies added workers in May at the fastest pace since February. “There’s always at this point of the cycle data that will be mixed� causing Treasury prices to swing, said Birgit Figge, a bond strategist at DZ Bank AG in Frankfurt. “Concerning the next two-week horizon we expect lower yields because the better data can’t surprise the market anymore. We’re waiting for the ADP data, then we will see real movements in the market.� The U.S. 10-year yield fell three basis points, or 0.03 percentage point, to 2.12 percent at 7:06 a.m. New York time, according to Bloomberg Bond Trader prices. The 1.75 percent note due in May 2023 rose 7/32, or $2.19 per $1,000 face amount, to 96 22/32. The yield dropped to 2.06 percent on May 31, the lowest since May 28. The MSCI Asia Pacific Index of shares slid 1.8 percent and the Stoxx Europe 600 Index fell 0.9 percent. U.S. stock-index futures also declined. Fed Buying While the Fed may cut its bond purchases, it will still probably keep quantitative easing in place, especially if rising rates start to cause problems for the economy, said Jeffrey Gundlach, manager of the DoubleLine Total Return Bond Fund. (DBLTX) “It’s a horrible time to be exiting bonds,� Gundlach, chief executive officer of Los Angeles-based DoubleLine Capital LP, said yesterday in a web-cast presentation. Fed Bank of Dallas President Richard Fisher called for a reduction in the central bank’s $85 billion in monthly bond buying, while saying he sees an end to a three-decade bull market in bonds. “This is the end of a 30-year rally� in bonds, Fisher said yesterday to reporters after a speech in Toronto. “It would be prudent to dial back the rate of purchases we are making in mortgage-backed securities� now that “the housing market is in a good state, construction has started again, housing prices are appreciating significantly.� U.S. companies added 165,000 workers in May, after hiring 119,000 in April, according to a Bloomberg News survey of economists before ADP Research Institute releases the data at 8:15 a.m. New York time. Services Expand Separate figures today will show factory orders rose in April and service industries expanded in May, based on responses from economists. The Fed is scheduled to issue its Beige Book report on the economy. Australian bonds gained for the first time in three days as a government report showed the economy expanded at the slowest annual pace in almost two years, prompting traders to boost bets on further interest-rate cuts. The central bank cut its benchmark rate to 2.75 percent in May before pausing at a meeting yesterday. The yield on the country’s 5.5 percent securities due in April 2023 fell five basis points to 3.39 percent after rising to 3.50 percent on May 29, the highest level since March 27. Ten-year yields were at or near the highest levels for at least three months in 14 of 46 developed and local-currency emerging bond markets tracked by Bloomberg. The U.S., Germany, the U.K. and Canada were among the developed nations with yields at the top of their three-month range, according to data compiled by Bloomberg. It was the same for South Korea, Colombia, Brazil and South Africa among the emerging economies, the data show. To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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