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Treasuries Pare Losses After ADP Says Fewer Jobs Added

Sept. 4 (Bloomberg) -- Treasuries pared losses after a private report showed that employers added fewer jobs than forecast last month.

Forty-five percent of all government bonds yield less than 1 percent, Bank of America Corp. said, as central bankers in Japan, Europe and the U.K. decide on how to support their economies. The European Central Bank unexpectedly cut interest rates at today’s decision to spur economic growth and stave off the threat of deflation.

The U.S. 10-year note yield, a benchmark for borrowing costs around the world, was little changed at 2.40 percent as of 8:20 a.m. in New York, according to Bloomberg Bond Trader data. Treasuries maturing from one month to three years all yielded less than 1 percent.

Companies took on 204,000 workers in August, figures from the ADP Research Institute in Roseland, New Jersey, showed today. The median forecast of 43 economists surveyed by Bloomberg called for an August advance of 220,000. Estimates ranged from gains of 190,000 to 290,000.

Speculation that the European Central Bank will start buying debt in the year ahead pushed the yield spread between U.S. 10-year Treasuries and German bunds towards a 15-year high and German 10-year yields to a record low of 0.866 percent last week. The rally helped drive demand for Treasuries and other notes as investors sought higher interest payments than they can get across Europe.

The ECB’s 24-member Governing Council meeting in Frankfurt reduced all three of its main interest rates by 10 basis points. The benchmark rate is now 0.05 percent and the deposit rate is now minus 0.2 percent. A reduction in the benchmark rate was predicted by just 6 of 57 economists in a Bloomberg News survey. Draghi will speak to reporters at 2:30 p.m. in Frankfurt to explain the decision.

The Bank of Japan finished its meeting today by maintaining its record debt purchases of 60 trillion yen ($572.4 billion) to 70 trillion yen a year.

Futures contracts indicate traders are betting the Federal Reserve will raise interest rates in the U.S. next year. Policy makers have kept their target for federal funds, the rate banks charge each other on overnight loans, at zero to 0.25 percent since 2008. The policy has capped bond yields and helped send the Standard & Poor’s 500 Index to a record high yesterday.

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