Oct. 2 (Bloomberg) -- Treasuries gained, pushing 10-year note yields toward a seven-week low, after a report by ADP Research Institute showed companies in the U.S. added fewer jobs than forecast in September, adding to demand for refuge.
Bonds advanced earlier as the partial shutdown of the U.S. government showed no signs of ending quickly. The first day ended with no talks scheduled between the White House and Congress, making it more likely the standoff will merge with a debate over raising the federal debt ceiling. Treasury Secretary Jacob J. Lew said the U.S. has begun using the last measures available to avoid breaching the limit.
"This number came in a bit below expectations, which is precipitating a bit of a rally in Treasuries," said Christopher Sullivan, who oversees $2.2 billion as chief investment officer at United Nations Federal Credit Union in New York. "Employment growth has been deteriorating a bit, and this is another confirmation of that idea."
The benchmark 10-year yield fell two basis points, or 0.02 percentage point, to 2.63 percent at 9:26 a.m. New York time, according to Bloomberg Bond Trader prices. The price of the 2.5 percent note due in August 2023 rose 6/32, or $1.88 per $1,000 face amount, to 98 29/32. The yield dropped to as low as 2.60 percent after falling on Sept. 30 to 2.59 percent, the least since Aug. 12.
Rates on Treasury bills that mature Oct. 24 decreased to 0.055 percent today, from 0.075 percent yesterday and negative 0.01 on Sept. 27. Two years ago, one-month bills climbed to a 29-month high of 0.18 percent as the Aug. 2, 2011, deadline set by Treasury to avoid a default approached.
Three-month Treasury bill rates fell to 0.0051 percent from 0.0152 percent yesterday. They reached negative 0.0101 percent on Sept. 27, the lowest level this year. The 2013 average is 0.048 percent.
Treasury price swings as measured by the Merrill Lynch Option Volatility Estimate Index jumped 9 percent yesterday, the biggest increase since Aug. 16. The gauge advanced for a fifth day, the longest run of increases in four weeks. The index was at 87.37, versus the average of 69.07 for the past year.
U.S. government securities lost 2.5 percent this year through yesterday, according to the Bloomberg U.S. Treasury Bond Index, reflecting speculation the Federal Reserve is planning to reduce its $85 billion in monthly bond purchases as the world’s biggest economy improves.
Treasuries fell yesterday, with 10-year yields increasing four basis points to 2.65 percent, on speculation the government shutdown might end soon enough for lawmakers to work on extending the federal debt limit.