By Theresa Barraclough Feb. 4 (Bloomberg) -- Treasuries rose, pushing 10-year yields down from near the highest in two weeks, as a decline in Asian shares boosted the appeal of government securities. Thirty-year bonds led gains on speculation European countries such as Greece and Portugal will face increasing difficulty financing their budget deficits, boosting demand for the safety of U.S. debt. The Treasury said yesterday there’s no need for it to boost auction sizes any further. “U.S. Treasuries are still a safe-haven for many people,” said Satoshi Okumoto, a manager in Tokyo at Fukoku Mutual Life Insurance Co., which oversees the equivalent of $58.9 billion in assets. “Concerns and uncertainties surrounding the euro region, trade tensions and political concerns” boost Treasuries. The yield on the benchmark 10-year note fell one basis point to 3.69 percent as of 2:05 p.m. in Tokyo, according to BGCantor Market Data. It climbed to 3.71 percent yesterday, the highest since Jan. 19. The 3.375 percent note due November 2019 gained 3/32, or 94 cents per $1,000 face amount, to 97 13/32. Thirty-year yields slid two basis points to 4.62 percent as the MSCI Asia Pacific Index of shares dropped 1 percent. Credit-default swaps on Portuguese debt surged 29 basis points yesterday to a record 196, according to CMA DataVision. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments including Portugal and Greece jumped five basis points to an all-time high of 93.5, CMA prices show. Cutting Portugal’s deficit will require “difficult” measures and the economy is unlikely to catch up with its European counterparts any time soon, central bank Governor Vitor Constancio said Feb. 2. Factory Orders The gain in Treasuries was tempered before U.S. reports today and tomorrow forecast to show factory orders climbed for a fourth month in December and companies added jobs in January. “The business sector is good and if it lifts the labor sector, then there’ll be a faster economic recovery,” said Yasutoshi Nagai, chief economist in Tokyo at Daiwa Securities SMBC Co., a unit of Japan’s second-largest brokerage. “If employment continues to grow, then Treasury yields may go up.” Ten-year yields may climb to 4.13 percent by year-end, according to a Bloomberg survey of economists and analysts. The forecast puts a heavier weighting on more recent estimates. Orders placed with U.S. factories increased 0.5 percent, after a 1.1 percent gain in November, according to the median estimate of economists surveyed by Bloomberg News before the Commerce Department report today. ‘Positive Payrolls’ Payrolls rose by 15,000 workers last month, after an unexpected loss of 85,000 in December, according to a separate Bloomberg survey before tomorrow’s report. ADP Employer Services said yesterday companies cut 22,000 jobs last month, less than the 30,000 decrease forecast in another Bloomberg survey. “The ADP employment report came in better than expected,” Adam Carr, a senior economist at ICAP Australia Ltd. in Sydney, wrote in a report. “That result will probably buoy those looking for a positive payrolls report this Friday.” The Treasury, in its quarterly refunding announcement yesterday, said it will sell a record-matching $40 billion in three-year notes, $25 billion of 10-year debt and $16 billion in 30-year bonds next week. The auctions will be held over three days starting Feb. 9. ‘Sufficient Flexibility’ The government “believes that the current auction calendar provides debt managers with sufficient flexibility to address a range of expected borrowing needs,” said Matthew Rutherford, the Treasury’s deputy assistant secretary for federal finance, according to minutes of an advisory committee meeting. The Treasury also said it’s considering more frequent sales of Treasury Inflation Protected Securities, or TIPS, to improve liquidity in this market. One possible addition is a second reopening of 10-year TIPS, which would start in July if implemented, the department said. Treasuries indicate traders are adding to bets inflation will quicken as the economy revives. The difference between yields on 10-year notes and comparable TIPS, a gauge of trader expectations for consumer prices, widened to 2.40 percentage points from 1.16 percentage points a year ago. President Barack Obama has increased the U.S. marketable debt to a record $7.27 trillion as he tries to sustain the economic recovery from last year’s recession. He projects the U.S. budget deficit will rise to a record $1.6 trillion. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.

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