U.S.TREASURIES-Prices ease as global growth prospects rise
* China factory surveys show country's economy gaining traction
* ADP's Oct private payrolls rises by more than expected
* Treasuries trade volume below average after storm Sandy
NEW YORK, Nov 1 (Reuters) - U.S. Treasury debt prices fell on Thursday while stocks rose as data on Chinese manufacturing and U.S. private sector employment bolstered the outlook for global economic growth and undercut demand for safe-haven U.S. government debt. Trade volume was below normal as many workers were not yet able to get to their offices because of power outages and public transit disruptions along the eastern U.S. seaboard in the wake of super-storm Sandy. U.S. shares followed China's stock markets higher after official and private China manufacturing surveys for October suggested China's economy is finally regaining traction.
China's central bank also conducted its largest-ever net fund injection this week, signaling its intention to keep money market conditions relatively loose and support lending. Some investors looking ahead to Friday's all-important U.S. non-farm payrolls data for October took direction from the ADP National Employment Report showing U.S. companies added 158,000 jobs in October, which was the fastest pace in eight months.
``We are reacting to stocks being higher, a stronger Chinese purchasing managers number and a little bit stronger-than-expected ADP number,'' said Mary Ann Hurley, vice president of fixed-income trading at D.A. Davidson & Co in Seattle. Trade volume has not yet recovered after markets shut early in the week when Sandy, one of the biggest storms ever to hit the United States, slammed the east coast and wreaked havoc on New York City and nearby coastal towns. The bearish tone in Treasuries on Thursday was supported by data showing new claims for U.S. jobless benefits slipped in the latest week, while an industry group reported U.S. consumer confidence last month rose to its highest level in more than four years. The Institute for Supply Management's manufacturing index for October also came in slightly above economists' consensus forecast. Deutsche Bank Securities strategist Alan Ruskin said the ISM report showed ``the worst has been seen for the time being in the manufacturing sector with the nadir hit in the July-August period.'' Benchmark 10-year Treasury notes traded 6/32 lower in price to yield 1.72 percent, up from 1.70 percent late Wednesday, while 30-year bonds dipped 23/32 in price to yield 2.89 percent, up from 2.86 percent on Wednesday. Combined with a lack of fresh news from Europe overnight, the China news and the U.S. economic data put a little pressure on Treasuries prices, said Steven Van Order, fixed-income strategist at Calvert Investment Management in Bethesda, Maryland. Fridays' U.S. payrolls report for October will set the tone for the U.S. Treasury market next week and likely for the month ahead, Van Order said. A much stronger-than-forecast payrolls report could encourage some selling in Treasuries while a weaker-than-forecast report would likely spur buying. The median of forecasts from economists polled by Reuters was for employers to have added 125,000 jobs in October, up from 114,000 new jobs in September. Traders also have their eye on upcoming supply next week when the Treasury will sell $32 billion in three-year notes, $24 billion in 10-year notes, and $16 billion in 30-year bonds. Also in the offing are a potential backlog of municipal and corporate debt issuance from issuers who have delayed offerings because of the storm and may wait until after next week's presidential election as well, Van Order said. ``We could see some pent-up issuance in coming weeks,'' he said.