(Bloomberg) — Treasuries dropped for a third day before government reports today and tomorrow that economists said will show the job market is improving, reducing demand for the safest assets.
U.S. securities extended this week’s decline amid speculation a recovering labor market make it more likely the Federal Reserve will keep trimming bond buying. Federal Reserve Bank of Philadelphia President Charles Plosser, who votes on monetary policy this year, said yesterday he expects the economy to grow enough to warrant a further tapering of debt purchases.
“We are still quite positive on the U.S. economy,” said Vincent Chaigneau, head of fixed-income and foreign-exchange strategy at Société General SA in Paris. “We believe we’ll see better U.S. data again and that will translate into a selloff in Treasuries. We’re leaning to the bearish side.”
The 10-year yield climbed one basis point, or 0.01 percentage point, to 2.68 percent at 6:56 a.m. in New York after rising nine basis points during the previous two days, according to Bloomberg Bond Trader prices. The 2.75 percent note due in November 2023 fell 3/32, or 94 cents per $1,000-face amount, to 100 5/8.
U.S. employers added 183,000 jobs last month, up from 74,000 in December, based on a Bloomberg News survey of economists before tomorrow’s Labor Department report. First-time claims for jobless benefits dropped to 335,000 last week, from 348,000 the week before, a separate survey showed before the figure is released today.
Treasuries due in 10 years and longer returned 6 percent in January, according to data compiled by Bloomberg, as declines in emerging markets boosted demand for the safest assets.
Currencies including the Polish zloty, the Argentine peso and the Hungarian forint have strengthened more than 1 percent against the dollar this week.
“There are troubles in selected countries, but on the whole, most of them are better placed than they were in previous emerging-market crises,” St. George Bank’s Chan said. “It’s a concern and could keep popping up this year but I don’t think it will escalate significantly.”
Plosser said the world’s largest economy may expand 3 percent in 2014 as the unemployment rate declines to 6.2 percent by year-end.