Bloomberg (February 3, 2012) - Treasuries headed for a second weekly gain on speculation a U.S. employment report today will bolster the Federal Reserve’s view that the economy requires support from record-low interest rates even as it adds jobs.

U.S. 10-year yields were little changed at 1.82 percent at 7:22 a.m. in New York, according to Bloomberg Bond Trader prices. The 2 percent note maturing in November 2021 traded at 101 19/32. The yield dropped seven basis points, or 0.07 percentage point, this week.

Five-year notes yielded 0.71 percent after falling to a record 0.6981 percent on Jan. 31.

U.S. employers added 140,000 workers in January, after hiring 200,000 in December, according to a Bloomberg News survey before the Labor Department report today. The unemployment rate will hold at 8.5 percent, a separate survey showed.

The central bank has already purchased $2.3 trillion of Treasury and mortgage-related bonds in two rounds of easing that ended in June. Bernanke yesterday told lawmakers the Fed wouldn’t sacrifice its inflation goal to boost employment.

“The Fed wants to err on the side of creating a bit more inflation,” said Rick Rieder, chief investment officer for fundamental fixed-income portfolios at BlackRock, which manages $3.51 trillion. “I don’t think it’s a 2012 event. As you get into 2013, 2014, you could see more.”

The central bank is in the process of replacing $400 billion of shorter-maturity Treasuries in its holdings with longer-term debt to cap borrowing costs, under a program it plans to conclude in June.

The Fed is scheduled to sell as much as $8.75 billion of securities due from May to November of this year today as part of the exchange, according to the New York Fed’s website.

The U.S. is due to sell $72 billion of coupon-bearing securities including 30-year bonds next week.