TREASURIES-Bonds slip in profit-taking after recent gains

* Investors take back some of week’s sharp price gains

* Private employers add less jobs than expected in June

* Benchmark yields remain below 3 percent
(Adds yield curve background, updates prices)

By Chris Reese

NEW YORK, June 30 (BestGrowthStock) – U.S. Treasuries eased on
Wednesday as investors clawed back some of this week’s sharp
gains driven by safe-haven buying on worries over Europe’s debt
crisis and evidence of only a tentative economic recovery.

Losses were limited however after a report showed private
employers added far fewer U.S. jobs this month than expected,
raising concerns that government non-farm payrolls and
unemployment data on Friday may disappoint.

U.S. private employers added 13,000 jobs this month, down
from a revised gain of 57,000 jobs in May, the ADP Employer
Services showed Wednesday, and well below forecasts of a rise
of 60,000 jobs. For details, see [ID:nN30395701]

“Bonds have come off their lows on this disappointing
(jobs) number. This is definitively a bond positive report, but
the market has rallied so much for the past few days, breaking
through some key resistance that you need more and more
negative news to provide firepower for the market to go
higher,” said Lee Olver, managing director of financial
strategies in the fixed income division at Madison Williams &
Co in Houston.

Treasuries pared price losses after the release of the ADP
data, and benchmark 10-year Treasury notes (US10YT=RR: ) last
traded 9/32 lower in price to yield 2.99 percent, up from 2.95
percent late Tuesday.

Benchmark yields fell below 3 percent for the first time in
14 months on Tuesday on persistent worries over contagion from
the euro zone fiscal mess and concerns the U.S. may be heading
for a double-dip recession.

The 10-year note is on track for its biggest quarterly dip
in yield since the fourth quarter of 2008, when world economies
were in the grips of a severe credit crunch.

Benchmark yields have lost about 85 basis points from 3.84
percent at the beginning of April.

While still at comparatively wide levels overall, the yield
curve has flattened markedly during the quarter, with the
spread between yields on two-year notes and 10-year notes
narrowing to 234 basis points Wednesday from 281 basis points
at the beginning of April. The yield curve hit an all-time
steep closing level of 291 basis points in February, according
to Reuters data.

Major technical resistance in the yield curve stands at 245
basis points, with support at 205 basis points, Jessica
Hoversen and Nick Kalivas, analysts at MF Global in Chicago,
said in a note on Wednesday.

Worries over the impact of the European debt crisis were
soothed early Wednesday after banks borrowed less than expected
from the European Central Bank in a key funding operation. The
relatively low take-up quelled concerns about bank finances.

“Obviously (the ADP number) was a little disappointing.
That was the risk, but nevertheless we have seen Treasuries
rebound a little bit on the news. There was some profit-taking
overnight, and a little bit of calm over the ECB’s tender
knocked Treasuries a little bit lower,” said Kim Rupert,
managing director of global fixed income analysis at Action
Economics LLC in San Francisco.

Two-year Treasury notes (US2YT=RR: ) traded 3/32 lower in
price to yield 0.65 percent, up from a record low of 0.59
percent on Tuesday, while 30-year bonds (US30YT=RR: ) traded
11/32 higher in price to yield 3.95 percent from 3.93 percent.

Investors largely shrugged off data showing business
activity in the U.S. Midwest grew slightly more than expected
in June. The Institute for Supply Management-Chicago business
barometer fell to 59.1 in June from 59.7 in May, but topped
forecasts of 59.0.

Stock Market Today

(Additional reporting by Richard Leong; editing by Jeffrey

TREASURIES-Bonds slip in profit-taking after recent gains