Treasury yields rise from 3-week low on services, jobs reports

Treasury 10-year yields rose from a three-week low as a measure of U.S. service industries expanded faster than forecast and a private report showed employers added more jobs than projected, signs the economic recovery may be strengthening.

Benchmark security yields fell earlier after China’s non-manufacturing industries expanded at a slower pace in September. The 30-year bond pared losses after Spain’s economy minister said the country’s recovery depends on clearing up doubts about the euro. The U.S. jobless rate probably rose in September as employers kept a lid on hiring, a Labor Department is forecast to show on Oct. 5.

“Today’s numbers in a rather light environment provided a little bit of selling pressure,” Kevin Flanagan, a Purchase, New York-based fixed-income strategist for Morgan Stanley Smith Barney, said in a phone interview. “We continue this back and forth with economic data here, and what’s going on in the euro- zone.”

The yield on 10-year notes were little changed as 1.62 percent at 2:39 p.m. in New York, based on Bloomberg Bond Trader data. It earlier reached 1.60 percent, the lowest since Sept. 7. The 1.625 percent security due August 2022 traded at 100 1/32.

The 30-year yield rose one basis point, or 0.01 percentage point, to 2.83 percent.

Economic Reports

The Institute for Supply Management’s index of U.S. non-manufacturing businesses, which covers about 90 percent of the economy, rose to 55.1 in September from the prior month’s 53.7, the Tempe, Arizona-based group said today. The median forecast of 77 economists surveyed by Bloomberg projected 53.4. Readings

The ADP Employer Services report showed that employers added 162,000 jobs last month, compared with a forecast of 140,000 jobs in a Bloomberg News survey of economists and a revised 189,000 the prior month.

The Labor Department is forecast to show the U.S. last month added 115,000 jobs, compared with 96,000 in August, according to a Bloomberg News survey. The unemployment rate is expected to rise to 8.2 percent from 8.1 percent, a separate survey of economists said.

“There’s still a great deal of economic uncertainty facing the market -- the labor component and the labor market read is going to be very important,” Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut, said in a phone interview. “The market is unwilling to really take a strong stance in either direction at this point so close to the numbers. We’re kind of staying in this range.”

Mortgage applications in the U.S. climbed last week to the highest level in more than three years as borrowing costs dropped to a record low.

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