Treasuries gained, snapping their biggest decline this year, as economists said employment reports this week will show the U.S. economy is having trouble picking up.
The Bloomberg Global Developed Sovereign Bond Index has gained 2 percent in 2014 after tumbling emerging-market currencies and signs of slowing economic growth sent securities surging as investors sought the safest assets. Australian debt was little changed today, while Japanese sovereign notes were mixed.
“Some weak U.S. data are challenging the view that the economy will pick up further momentum,” said Su-Lin Ong, a senior economist at Royal Bank of Canada in Sydney. “There’s a risk for yields to go lower, particularly with emerging market concerns lurking in the background. That’s going to be there for a lot of this year.”
U.S. 10-year yields fell 2 basis points to 2.61 percent as of 11:36 a.m. in Tokyo, Bloomberg Bond Trader data show. The 2.75 percent note due in November 2023 changed hands at 101 6/32. The yield climbed five basis points yesterday, the biggest increase since Dec. 31. A basis point is 0.01 percentage point.
Japan’s 10-year yield rose half a basis point to 0.61 percent. It dropped to 0.6 percent yesterday, a level not seen since November. The rate on 20-year notes fell as low as 1.41 percent today, the least since April.
Australia’s 10-year borrowing cost were at 4.01 percent, compared with yesterday’s low of 3.93 percent, the least since October.
U.S. companies probably added 185,000 workers in January, based on a Bloomberg News survey of economists before ADP Research Institute reports the figure today. The average for 2013 was 179,600. The world’s biggest economy probably gained 184,000 jobs last month, versus an average of 182,170 last year, based on responses from economists ahead of the Labor Department figures Feb. 7.
Services growth probably accelerated in January, after expanding at the end of last year at the slowest pace since July 2012. The Institute for Supply Management’s non-manufacturing index rose to 53.7 from 53 in December, according to economists polled before today’s report.
Bonds beat stocks last month for the first time since August as fixed-income securities worldwide enjoyed their best start to a year since 2008. Argentina led a slide in emerging market currencies, while manufacturing in China slid to a six- month low.
Uncertainty about China’s growth this year is adding to investors’ unease and demand for the safest of assets, said Bill Gross, who oversees the world’s biggest bond fund at Pacific Investment Management Co.
“I call China the mystery meat of emerging-market countries,” Gross said yesterday during an interview on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle. “Nobody knows what’s there and there’s a little bit of bologna, so we’re just going to have to wonder going forward through this year as to the potential problems in China and other emerging markets.”
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