U.S. Notes Little Changed; Report May Show Job Growth Slowed

U.S. Treasuries were little changed before a government report that economists say will show employment growth slowed as a housing recession led companies to fire workers.

Notes recouped initial losses after traders increased bets the Federal Reserve will cut interest rates next month for a third time this year. Two-year securities yesterday had their second-biggest gain in 2007 as analysts said Citigroup Inc., the largest U.S. bank, may be short of capital to pay dividends and advised investors to sell its shares.

``I'm still bullish on the market,'' said Hiroki Shimazu, a fixed-income economist at Mizuho Securities Co. in Tokyo. ``The U.S. economy is really unstable.''

Two-year yields fell 1 basis point to 3.74 percent as of 6:47 a.m. in London, according to bond broker Cantor Fitzgerald LP. The price of the 3 5/8 percent notes due in October 2009 rose 1/32, or 31 cents per $1,000 face amount, to 99 25/32. The notes headed for a third weekly gain, with yields falling almost half a percentage point during the period.

Ten-year yields were little changed today at 4.35 percent. A basis point is 0.01 percentage point.

Treasuries rose yesterday when Citigroup slid the most since 2002 after CIBC World Markets said the company may cut its dividend and Credit Suisse Group reduced its rating. Bank of America Corp., the second-largest bank, had its biggest decline in four years.

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