Treasuries fell, headed for a third weekly loss, after traders added to inflation bets and Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank may begin unwinding its stimulus by year-end. The difference between yields 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 2.61 percentage points. It was the most in 32 months. “The Fed speakers are making very hawkish comments,” said Chungkeun Oh, a fixed-income trader in Seoul at Industrial Bank of Korea, South Korea’s largest lender to small and medium-sized companies. “People are thinking the Fed will hike rates. I’m not sure if it will happen this year or next, but we have to prepare for it. Yields are rising.” Ten-year rates increased two basis points to 3.57 percent as of 10:29 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 3.625 percent note maturing in February 2021 declined 5/32, or $1.56 per $1,000 face amount, to 100 15/32. Policy makers last month differed over whether to begin removing record stimulus this year as they debated the path of monetary policy after the completion of their $600 billion bond- purchase program, minutes released this week of the Fed’s March 15 meeting showed. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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