Sept. 24 (Bloomberg) -- Treasuries dropped, pushing the 10- year note yield up for the first time in six days, as a report showed orders for durable goods excluding transportation items increased in August more than analysts forecast. The benchmark 10-year note pared its weekly advance as evidence of an economic recovery discouraged speculation that the Federal Reserve will boost purchases of U.S. debt. Equities and crude oil advanced, reducing demand for the relative safety of government debt. "The data is a little bit better than people expected overall," said Thomas L. di Galoma, head of U.S. rates trading in New York at Guggenheim Partners LLC, a brokerage for institutional investors. "Bonds have rallied quite a bit over the last two weeks, so given the stronger data and rising stocks we are giving some of the gains back." The yield on the 10-year note increased 4 basis points, or 0.04 percentage point, to 2.59 percent at 11:24 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 dropped 11/32, or $3.44 per $1,000 face amount, to 100 1/4. The 10-year yield was still headed for a weekly drop of 15 basis points, matching the decrease during the five days ended Aug. 13. The two-year yield gained today 2 basis points to 0.44 percent, compared with the record low of 0.41 percent reached Sept. 22. It was poised for a drop this week of 3 basis points. U.S. stocks rose for the first time in four days, pushing the Standard & Poor's 500 Index up 2 percent. Gold advanced to a record, with futures rising above $1,300 an ounce. Oil for November delivery climbed 0.5 percent to $75.56 a barrel. Durable Goods Bookings for U.S. goods meant to last at least three years excluding transportation items increased 2 percent last month after dropping 2.8 percent in July, the Commerce Department reported today. The median forecast of 48 economists in a Bloomberg News survey was for a gain of 1 percent. Treasuries briefly pared losses after the Commerce Department reported that sales of new homes were unchanged at an annual pace of 288,000 in August, matching the previous month as the second-lowest in data going back to 1963. The median forecast of 72 economists in a Bloomberg News survey was for an advance of 6.9 percent. The Fed said in its statement on Sept. 21 that it's prepared "to provide additional accommodation if needed to support economic recovery and to return inflation, over time, to levels consistent with its mandate." "This is another indication of the Fed's desire to push long rates lower in an effort to stimulate the economy," Kevin Giddis, president of fixed-income capital markets in Memphis, Tennessee, at the brokerage firm Morgan Keegan Inc., wrote in a note to clients. Inflation Rate Consumer prices excluding food and energy increased in August for a fifth month at an annual rate of 0.9 percent, matching the slowest year-over-year rate of gains since 1966, the Labor Department said Sept. 17. The central bank retained its stance from its Aug. 10 meeting of keeping its portfolio of securities stable at about $2 trillion to keep money from draining out of the financial system. The Fed bought today $3.89 billion of Treasuries maturing from September 2014 to August 2016, increasing the amount it has bought since Aug. 17 to $34.062 billion. The Fed bank completed in March a program of quantitative easing to purchase $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The central bank was the biggest buyer of Treasuries when it bought $300 billion of U.S. debt in 2009. Another round of asset purchases by the Fed may exceed the amount it bought in 2009, according to Citigroup Inc. Outlook on Easing "Should quantitative easing become necessary, we expect that the sizing will be approximately $100 billion per month in U.S. Treasuries only, with an initial window of two to three quarters," Brett Rose, a strategist at Citigroup in New York, wrote in an e-mailed report this week. The Treasury announced yesterday that it will sell $100 billion in two-, five- and seven-year notes at auction next week. The government reduced two- and five-year note offerings by $1 billion to $36 billion and $35 billion, respectively, while keeping the offering of seven-year securities at $29 billion. The sales amounted to $102 billion the last time the government sold this combination of securities in August. --With assistance from Keith Jenkins in London and Wes Goodman in Singapore. Editors: Dennis Fitzgerald

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