TREASURIES-Prices tumble on US jobs data, ECB bond buy plan

Thu Sep 6, 2012 9:07pm IST

* U.S. private sector adds more jobs than expected in August
    * ECB announces unlimited bond buying program
    * U.S. weekly jobless claims come in lower than forecast

    By Chris Reese
    NEW YORK, Sept 6 (Reuters) - U.S. Treasuries prices fell on
T hursday as the European Central Bank's announcement of a
bond-buying program and higher-than-expected private sector U.S.
jobs growth in August undermined the safe-haven appeal of U.S.
government debt.
    ECB President Mario Draghi said the central bank will buy
unlimited amounts of short-dated bonds to help lower the
borrowing costs of Spain and Italy, which are bearing the brunt
of the debt crisis in the euro zone. 
    Draghi is looking to back up his July promise to do whatever
it takes to preserve the euro.
    "Draghi with his debt purchase details this morning will
move Europe from a bad to a good equilibrium," said Chris
Rupkey, financial economist at Bank of Tokyo-Mitsubishi UFJ in
New York.
    Separately, according to the ADP National Employment Report,
U.S. private employers added 201,000 jobs in August, easily
beating economists' expectations for 140,000 new private sector
jobs. 
    The jobs report boosted the outlook for the government's
nonfarm payrolls data for August, to be released on Friday, and
damped expectations for another round of economic stimulus from
the Federal Reserve.
    The news from Europe, along with the U.S. jobs data, sapped
the safety appeal of U.S. government debt, and benchmark 10-year
Treasury notes traded 22/32 lower in price to yield
1.67 percent, up from 1.55 percent late Wednesday.
    Benchmark yields were trading at the highest in over a week,
and the notes were on track for the biggest daily rise in yield
in over three weeks.
    Lower-than-expected weekly claims for U.S. jobless benefits
added to the bearish tone in Treasuries, as did data from the
Institute for Supply Management showing the pace of growth in
the U.S. services sector rose in August. 
    "Today's U.S. reports all beat expectations to put a
positive spin on the risks as we approach Friday's U.S. jobs
data," said Michael Englund, chief economist at Action Economics
in Boulder, Colorado. 
    The median of forecasts from economists polled by Reuters is
for U.S. employers to have added 125,000 jobs in August, down
from 163,000 new hires in July.
    Thirty-year Treasury bonds were trading 1-2/32
lower in price to yield 2.76 percent from 2.71 percent late
Wednesday.