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BLBG: Treasuries Decline Before Government's $10 Billion Bond Auction
 
By Cordell Eddings

Nov. 13 (Bloomberg) -- Treasuries fell, led by longer-term securities, as traders prepared for a sale of $10 billion of 30- year U.S. bonds.

The gap between yields on two- and 10-year government notes widened to 2.55 percentage points, the largest since 2003. The size of the Treasury's bond sale today at 1 p.m. matches the last 30-year auction in August as the biggest since 2006. Stocks rose.

``Today is a combination of supply and stock-market uncertainty,'' said Alex Li, an interest-rate strategist in New York at Credit Suisse Securities USA LLC, one of the 17 primary dealers that trade with the Federal Reserve.

The yield on the 30-year bond advanced 5 basis points, or 0.05 percentage point, to 4.22 percent at 10:18 a.m. in New York, according to BGCantor Market Data. The 4.5 percent security due in May 2038 dropped 26/32, or $8.13 per $1,000 face amount, to 104 23/32.

The two-year note's yield rose 3 basis points to 1.20 percent. The 10-year note's yield increased 3 basis points to 3.77 percent.

The Standard & Poor's 500 Index gained 1.4 percent.

The Treasury Department is increasing debt sales to pay for its $700 billion financial-system rescue and burgeoning federal budget deficits. It auctioned $25 billion of three-year notes on Nov. 10 and $20 billion of 10-year securities yesterday.

Today's sale is a reopening, meaning the securities to be sold will pay interest at the same rate and mature on the same date as those in the August auction.

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net.

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