(Bloomberg News) Treasuries extended losses after a private report showed U.S. companies added more jobs in August than economists forecast, adding to speculation that employment growth may be accelerating.
Yields on benchmark 10-year notes climbed for a third day before the release tomorrow of the August U.S. employment report. Government bonds yields earlier climbed from almost a one-month low amid speculation the European Central Bank will announce details of a plan to buy sovereign bonds of highly- indebted euro-region nations, reducing the refuge appeal of U.S. government securities.
"It looks like it put pressure toward higher yields," said Thomas Simons, a money market economist at Jefferies & Co. Inc. in New York. "It may cause people to revise up their forecasts for tomorrow."
The 10-year yield rose five basis points, or 0.05 percentage point, to 1.64 percent at 8:26 a.m. in New York. The rate touched 1.54 percent on Sept. 4, the lowest since Aug. 6.
Companies in the U.S. added 201,000 workers in August, according to figures from Roseland, New Jersey-based ADP Employer Services. The median estimate in a Bloomberg survey called for a 140,000 increase.
A Labor Department report tomorrow is forecast to show the U.S. added 127,000 jobs, according to 88 economists in a separate survey. The unemployment rate held steady at 8.3 percent, a separate survey of economists said.
U.S. government bonds had returned 2.5 percent in 2012 through yesterday, Bank of America Merrill Lynch index data show. That compares with a 13 percent gain in the Standard & Poor's 500 Index of shares, including reinvested dividends. German securities handed investors a 3.5 percent gain during the same period, according to the indexes.
The ECB blueprint, which may be called "Monetary Outright Transactions," will focus on government bonds rather than a broader range of assets and will target maturities of three years or less, according to central-bank officials briefed on the proposal who requested anonymity.
Europe's central bank will sterilize its bond purchases by removing the same amount of money it spends from elsewhere in the system, ensuring a neutral impact on money supply, the officials said. Policy makers meeting in Frankfurt left the benchmark rate at a record low of 0.75 percent, as predicted by 28 of 58 economists in a Bloomberg survey.
The policy-setting Federal Open Market Committee meets Sept. 12-13. Federal Reserve Chairman Ben S. Bernanke, speaking on Aug. 31 in Jackson Hole, Wyoming, said the costs of "nontraditional policies" appeared manageable when considered carefully. He said he wouldn't rule out steps to lower a jobless rate he described as a "grave concern."