TREASURIES-U.S. bond prices fall on day before key jobs data

Thu Oct 4, 2012 3:20pm EDT

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By Karen Brettell
    NEW YORK, Oct 4 (Reuters) - U.S. Treasuries prices ended
lower on Thursday as traders focused on a highly anticipated
jobs report on Friday, and after minutes from the Federal
Reserve's September policy meeting showed that Fed members were
broadly in agreement over the need for additional stimulus.
    Bonds were little changed after the minutes showed that the
central bank's third round of quantitative easing was seen as
necessary to boost a meager economic recovery. 
    "I don't think there was anything surprising in there," said
Charles Comiskey, head of Treasuries trading at Bank of Nova
Scotia, in New York.
    The benchmark 10-year note's yield rose as high
as 1.66 percent, but stayed within its recent range of 1.60
percent to 1.66 percent, where it has held for the last eight 
trading sessions.
    The next main indicator for signs of the strength of the
economic recovery will be Friday's jobs report, which is
expected to show still sluggish growth.
    Job creation is a prime focus for the Fed, which is focused
on trying to bring down the stubbornly high unemployment rate.
    The payroll data is expected to show that employers added
113,000 jobs in September, but the jobless rate is forecast to
have ticked up to 8.2 percent for the month, from 8.1 percent in
August, according to a Reuters poll of economists.
    Some expectations that the jobs number could come in
stronger than forecast helped send Treasuries prices broadly
lower on Thursday, traders said.
    "Some accounts believe the payrolls data will be better than
the consensus forecast," said Tom di Galoma, managing director
at Navigate Advisors LLC, in Stamford, Connecticut.
    Expectations rose after a report from consultants
Challenger, Gray & Christmas showed planned job cuts announced
for the month of September at a 15-year low. 
    "There is decent profit-taking on the Challenger survey," di
Galoma said.
    A successful Spanish bond auction also reduced demand for
safe-haven U.S. debt, while hedging of corporate debt sales
added to bond weakness.
    "Spain played a part, and there also have been some
corporate rate locks and, to a small extent, a concession
starting to be built in ahead of next week's supply," said
Justin Lederer, Treasury strategist at Cantor Fitzgerald in New
York.
    The Treasury will auction $66 billion in three-year notes,
10-year notes and 30-year bonds next week.
    A strong showing by presidential candidate Mitt Romney in
Wednesday night's debate was also seen boosting his electoral
chances, which increased speculation that he would stop the
Fed's open-ended bond purchases if he wins office.
    "If Romney were to win the presidency, I think the bond
market would go down," said Nova Scotia's Comiskey. "The idea of
QE until the end of time, that would come to an end."
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