Treasuries were little changed before the government’s record auction of $32 billion of five-year notes. The securities earlier gained as U.S. equity futures declined. The government will also sell $22 billion of seven-year debt tomorrow as it borrows unprecedented amounts to spur the shrinking economy. President Barack Obama told Congress yesterday the rescue of banks will probably cost more than the $700 billion already committed. “We still think the fundamental backdrop is conducive to fixed income internationally even as it may be punctuated by bouts of indigestion due to supply,” said Richard McGuire, a senior fixed-income strategist at Royal Bank of Canada in London. “We see a structurally protracted slowdown accompanied by outright risks of deflation.” The five-year note yielded 1.88 percent at 7:50 a.m. in New York, according to BGCantor Market Data. The price of the 1.75 percent security maturing in January 2014 was 99 13/32. The sale of two-year notes yesterday drew a high yield of 0.961 percent, less than the 0.983 percent average forecast in a Bloomberg News survey of nine trading companies. Bids outnumbered the bonds on sale by 2.63 to 1, compared with an average of 2.33 at the prior 10 auctions. Indirect bidders, a group that includes foreign central banks, bought 28.1 percent of the amount sold, compared with an average of 32.1 percent at the past 10 auctions. Bernanke Forecast Bonds rose earlier as the MSCI World Index pared its gains to 0.6 percent, supporting demand for the safest of assets. Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. Federal Reserve Chairman Ben S. Bernanke yesterday told a Senate committee the economic slump may last into 2010. He testifies today to a House panel. Sales of new homes in the U.S. probably plunged to 324,000 in January, a record low, according to the median estimate of economists surveyed by Bloomberg News in advance of tomorrow’s Commerce Department Report.

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