Treasuries snapped a gain from yesterday before government and industry reports forecast to show economic growth quickened and consumer confidence improved. Demand for the relative security of debt waned after oil prices slid and Asian stocks halted a four-day slide. An index of bonds around the world still headed for its first monthly gain since August after almost two weeks of violence in Libya bolstered demand for the safest securities. Ten-year notes yielded 3.46 percent as of 6:48 a.m. in London, according to BGCantor Market Data. The 3.625 percent note maturing in February 2021 traded at 101 13/32. The rate slid to 3.41 percent yesterday, the lowest since Feb. 2. “The dip in yield is an opportunity to sell,” said Marc Fovinci, the head of fixed income in Portland, Oregon, at Ferguson Wellman Capital Management Inc., which oversees $2.8 billion. “Without this problem with Libya, things seem to be picking up in our economy. The question is, does the price of oil have an impact on our economy? So far, no.” Yields will advance to 3.93 percent by year-end, according to a Bloomberg survey of financial companies with the most recent forecasts given the heaviest weightings. Ferguson Wellman cut its Treasury holdings in the past week, Fovinci said. Quicker Growth U.S. gross domestic product grew at a 3.3 percent rate in the fourth quarter, faster than the 3.2 percent pace the government estimated in January, according to a Bloomberg News survey before today’s Commerce Department report. The Reuters/University of Michigan final confidence index for February climbed to 75.4 from a preliminary reading of 75.1, a separate survey showed. Boeing Co. was awarded a $35 billion government contract to build 179 new aerial refueling tankers yesterday. The company said the program will support at least 50,000 jobs in the U.S. Crude oil futures for April delivery traded at $97.91 a barrel, after rising to $103.41 yesterday, the highest level since September 2008. The MSCI Asia Pacific Index of shares gained 0.9 percent. The flight to quality that lasted through most of this week boosted bonds worldwide, said Hiromasa Nakamura, who helps oversee the equivalent of $42.7 billion as a senior investor at Mizuho Asset Management Co., part of Japan’s second-largest bank. Monthly Gain An index of debt around the globe has returned 0.1 percent this month as of yesterday, Bank of America Merrill Lynch data show. If the gain holds, it would snap the five-month slide, which was the longest since the figures started in 1997. Nakamura said he’s not convinced the U.S. economy will keep strengthening with the unemployment rate having been at 9 percent or more for the past 21 months. Mizuho bought Treasuries in December, he said. The Federal Reserve is scheduled to purchase $6 billion to $8 billion of government debt maturing from May 2018 to February 2021 today as part of its plan to sustain the expansion. Investors are snapping up shorter-maturity corporate bonds that are less susceptible to inflation as Middle-East tensions push oil toward $100 a barrel and food prices set a record. The extra yield investors demand to own one- to three-year investment-grade company bonds worldwide instead of government debt fell 19 basis points to 1.29 percentage points this year, according to the Bank of America indexes. That’s outpacing debt due in 10 years and later, which are more sensitive to prices in the economy due to longer maturities. Yields signal investors are betting inflation will quicken. The difference between rates on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, widened to 2.44 percentage points yesterday, the most since April. Five-year inflation swaps rose to 2.53 percent yesterday, the most since 2008. The securities allow investors to exchange fixed interest rates for returns equivalent to the consumer price index. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net. To contact the editor responsible for this story: Nicholas Reynolds at nreynolds2@bloomberg.net

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