U.S. 10-year notes declined as the Treasury prepares to auction $32 billion of three-year securities today, the first of three sales this week totaling $66 billion. Treasury break-even rates showed inflation expectations are approaching the highest level in a month before Federal Reserve policy makers start a two-day meeting to discuss measures to support U.S. growth. Dealers that trade with the Fed predicted the central bank will announce a plan to buy as much as $45 billion of government debt a month. The 10-year yield rose two basis points, or 0.02 percentage point, to 1.64 percent at 7:13 a.m. New York time, according to Bloomberg Bond Trader prices. The 1.625 percent bond due in November 2022 fell 6/32, or $1.88 per $1,000 face amount, to 99 7/8. The difference between yields on 10-year notes and Treasury Inflation Protected Securities widened less than a basis point, or 0.01 percentage point, to 2.50 percentage points. The spread, which measures investor expectations for inflation over the life of the securities, expanded to 2.51 percentage points on Dec. 7, the most since Nov. 7. -- Editors: Mark McCord, Nicholas Reynolds To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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