U.S. Treasury debt prices climbed on Wednesday, pushing benchmark note yields to the lowest since January 2009, after ADP Employer Services said private payrolls unexpectedly contracted in September.

The ADP report cast a pessimistic pall over expectations for September's non-farm payrolls numbers from the government, due on Friday, and bolstered the safe-haven allure of U.S. government debt.

The report also supported expectations the Federal Reserve will eventually have to step up its program of asset purchases in an effort to bolster the economy.

It really cements the fact that the Fed has to step in with more stimulus. The labor market is still struggling here, said Rudy Narvas, senior economist at Societe Generale in New York.

Benchmark 10-year notes US10YT=RR were trading 20/32 higher in price to yield 2.40 percent, down from 2.47 percent late on Tuesday. The yield fell to as low as 2.38 percent, the lowest since January 2009.

The five-year note US5YT=RR was trading 9/32 higher in price to yield 1.14 percent after dipping to a record low of 1.12 percent. The yield was down from 1.20 percent late on Tuesday.

ADP said private employers cut 39,000 jobs in September from an upwardly revised gain of 10,000 in August. Analysts had been looking for a rise of 24,000 private-sector jobs last month. For details see [ID:nN06255134].

The ADP report does suggest some downside risk and it trims the upper tail off of the potential outcomes from Friday, said Zach Pandl, U.S. economist at Nomura Securities in New York.

The median of forecasts from analysts polled by Reuters is for non-farm payrolls to have held steady in September after a contraction of 54,000 jobs in August. Forecasts for Friday's data range from a contraction of 75,000 jobs to an increase of 135,000.

The payrolls number is seen as key to whether or not the Fed will go ahead with another round of quantitative easing, which would likely involve an expanded program of Treasury debt purchases.

Rising expectations the Fed will embark on QE2 have in recent weeks been the prime driver in pushing yields to their current comparative lows.

The Fed on Wednesday will buy Treasuries under a program announced in August in which it is using funds from maturing agency bonds and mortgage-backed securities in an effort to keep steady its holdings of domestic securities. [FED/R]

Two-year Treasury notes US2YT=RR were trading 1/32 higher in price to yield a record low of 0.39 percent, while 30-year bonds US30YT=RR were 27/32 higher to yield 3.70 percent, down from 3.75 percent late on Tuesday.

(Additional reporting by Richard Leong and Emily Flitter) (Editing by Theodore d'Afflisio)

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