By Lukanyo Mnyanda Nov. 22 (Bloomberg) -- The difference in yield, or spread, between two- and 30-year Treasury notes fell to a two-week low as Ireland’s decision to seek a financial rescue package boosted stocks and sapped demand for the safest assets. Two-year notes also fell earlier before an auction of $35 billion today, part of $99 billion of sales planned for this week. The decline in the extra yield investors demand to hold 30-year notes reflected reduced demand for shorter-dated notes, which are perceived to be safer. An eventual financial-rescue package for Ireland may total 95 billion euros ($130 billion), according to Goldman Sachs Group Inc. “We already have strong sentiment and core markets could underperform further after this news,” said Karsten Linowsky, a fixed-income strategist at Credit Suisse Group AG in Zurich. “As long as we don’t know the details, it’s hard to say what the consequences” of Ireland’s rescue will be in the long term, Linowsky said. The yield on the two-year note was little changed at 0.51 percent as of 11:12 a.m. in London, according to data compiled by Bloomberg. The 0.375 percent security due in October 2012 was at 99 23/32. The yield has climbed 18 basis points since the end of October. The spread between two- and 30-year notes was at 372 basis points, after being as low as 371 basis points, the least since Nov. 9. It has narrowed from this year’s high of 171 basis points on Nov. 11. Euro Strengthens The euro strengthened for a fourth day against the dollar and the yen on speculation the funds will help Ireland restructure its financial industry, curbing a region-wide debt crisis that began this year in Greece. The benchmark Stoxx Europe 600 Index climbed 0.2 percent. Irish Finance Minister Brian Lenihan said at a press conference in Dublin yesterday that the loan will be less than 100 billion euros. “A small sovereign like Ireland faced with an outsized problem that we have in our banking sector, cannot on its own address all those problems,” Lenihan said. Two-year Treasury notes outperformed longer-dated counterparts this month as investors bet U.S. policy makers would keep interest rates at a record low as the economic recovery faltered. The notes have handed investors a 0.3 percent loss this month, versus a 4 percent decline for 30-year bonds, according to Bank of America Merrill Lynch indexes. Less Bearish Fund managers in a survey by Ried Thunberg ICAP Inc., a unit of the world’s largest interdealer broker, became less bearish on the outlook for Treasuries through year-end. Ried’s sentiment index rose to 49 for the seven days ended Nov. 19 from 46 the week before. A figure less than 50 indicates investors expect prices to fall. Treasuries yielded less than tax-exempt bonds for the first time since the financial crisis, a relationship that history shows doesn’t last, especially as the Fed kindles inflation expectations. Investors buying AAA municipal general obligation bonds due in two years get a yield equal to 116 percent of similar- maturity Treasuries, Bloomberg Fair Market Value data show. A ratio above 100 percent means those in the 38.3 percent federal tax bracket get higher yields plus tax-sheltered income. Before the credit crisis in 2008, that happened twice in the 20 years for shorter-maturity debt. The combination of worsening state and local finances and a surge in sales that included $15.5 billion of offerings last week, the most in more than seven years, has pushed tax-exempt bond payouts above Treasuries. “The value pendulum has swung from Treasuries to munis,” said Jonathan Lewis, founding principal of New York-based Samson Capital Advisors LLC, which manages $7.3 billion. “Municipals are a good place to park your money and get a yield advantage that typically wouldn’t be there.” -- With assistance from Cordell Eddings and Brendan A. McGrail in New York. Editors: Keith Campbell, Peter Branton. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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