Treasuries fell from the highest level in a week as a private report showed U.S. employers added jobs and unemployment claims fell, boosting speculation the Federal Reserve may cut its asset-purchase program this year.
Benchmark 10-year note yields briefly erased a drop after ADP Research Institute said U.S. companies added 188,000 jobs in June, compared with a forecast of 160,000 jobs in a Bloomberg News survey of economists. Jobless claims decreased by 5,000 to 343,000 in the week ended June 29. Another report July 5 is forecast to show the U.S. added 165,000 jobs. Treasuries rose earlier as investors sought safety after two of Portugal’s ministers resigned, reigniting concern the European debt crisis is worsening.
The ADP “number is a very strong number and the market is repricing closer back to the 2.50% level until we get to nonfarm payrolls,” said Dan Mulholland, head of Treasury trading at BNY Mellon Capital Markets in New York. “We expect the market to stay within two basis points of 2.50 going into Friday.”
The yield on the 10-year yield was little changed at 2.47% at 9:06 a.m. New York time, according to Bloomberg Bond Trader prices. It earlier fell to 2.41%, the least since June 21.
Jobless claims decreased from a revised 348,000 in the prior period that was higher than initially reported, the Labor Department said in Washington.
“With the data not particularly A-level, Friday is the number that matters -- this is just a warm-up,” said Dan Greenhaus, chief global strategist in New York at broker-dealer BTIG LLC. “Most discussions are centered on overseas issues, particularly Portugal.”
The U.S. unemployment rate dropped to a four year low of 7.5%, from 7.6%, according to 81 economists in a Bloomberg News survey before the report.
Treasuries declined last month after Fed Chairman Ben S. Bernanke said the central bank may scale back purchases of the securities later this year if there were sustained gains in employment .
U.S. debt gained earlier as Portuguese Foreign Affairs Minister Paulo Portas and finance chief Vitor Gaspar both quit, threatening the stability of the ruling coalition and pushing up the nation’s borrowing costs.