Treasuries fell for the first time in four days before the Federal Reserve announces its policy decision and releases economic forecasts amid speculation the central bank will maintain its bond-buying program. Benchmark 10-year yields climbed from a two-week low set yesterday as the European Central Bank said it would provide liquidity to Cyprus as needed within its rules, reducing demand for the safest assets. The Fed reiterated after its January meeting it will keep buying bonds until there’s “substantial improvement� in the labor market. The 10-year yield climbed two basis points, or 0.02 percentage point, to 1.92 percent at 8:10 a.m. in London, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2023 fell 6/32, or $1.88 per $1,000 face amount, to 100 22/32. The yield dropped to 1.89 percent yesterday, the lowest level since March 5. Chairman Ben S. Bernanke will probably start reducing the Fed’s $85 billion in monthly bond buying no earlier than the fourth quarter of 2013, economists said in a Bloomberg survey. The Fed chief will halt the unprecedented easing in the first half of next year after expanding central bank assets to a record of about $4 trillion, according to median estimates by 46 economists surveyed March 13-18 before the two-day meeting of policy makers ends today. Unemployment will have fallen to 7.3 percent from its current 7.7 percent when the Fed starts to pull back on its buying, the economists said. The Federal Open Market Committee plans to release a statement at 2 p.m. today in Washington and Bernanke is scheduled to hold a press conference at 2:30 p.m. Cyprus Concern Treasuries advanced yesterday after Cypriot lawmakers rejected an unprecedented levy on bank deposits, threatening to derail a bailout for the nation. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible� to formulate a new package for the island country. The ECB, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks. U.S. government securities have handed investors a loss of 0.4 percent this year, set for the biggest quarterly drop since the period ended March 2012, according to a Bank of America Merrill Lynch index. The Standard & Poor’s 500 Index (SPX) of U.S. shares has returned 9.1 percent, including reinvested dividends. To contact the reporter on this story: Neal Armstrong in London at narmstrong8@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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