Treasuries Fall as Employment Gains Cast Doubt on Fed’s Low-Rate Policy

Treasuries declined after the U.S. jobless rate unexpectedly fell to the lease in three years, raising skepticism about Federal Reserve Chairman Ben S. Bernanke’s extended low-rate policy and limiting demand for the safety of U.S. debt.

Yields on 30-year bonds reached the highest level in more than a week as the economy added more jobs in January than forecast, easing concern Europe’s debt crisis is stalling the U.S. recovery.

The difference between yields on 10-year notes and the inflation-indexed securities of the same maturity touched the widest since October. The U.S. will sell $72 billion in notes and bonds next week.

“The pressure is on the back end of the market,” said Michael Franzese, managing director and head of Treasury trading at Wunderlich Securities Inc. in New York.

“There are fears of inflation and fears Bernanke won’t be able to stop the inflation he thinks he can. This back-up makes it more palpable to buy the auctions. Those are nice concessions.”

From: Bloomberg