U.S. Treasuries rose alongside Japanese and Australian bonds as stocks tumbled after the World Bank cut its global growth forecast, fueling demand for the relative safety of government debt. Ten-year note yields fell the most in a week after the World Bank yesterday pared its projections for economic expansion in 2013 to 2.2 percent from a January estimate of 2.4 percent, on concern central banks would begin curtailing stimulus. In Treasuries, the biggest debt market at $11.5 trillion based on data compiled by Bloomberg, the U.S. government plans to sell $13 billion of 30-year bonds today, after demand declined at 10- and three-year auctions this week. “Investors are chasing the safe assets,� said Chungkeun Oh, who invests in Treasuries at Industrial Bank of Korea (024110) in Seoul. “Equities are getting hammered.� U.S. 10-year yields fell six basis points, or 0.06 percentage point, to 2.17 percent at 8:39 a.m. London time, according to Bloomberg Bond Trader data. The price of the 1.75 percent note due May 2023 increased 1/2, or $5 per $1,000 face amount, to 96 1/4. Japan’s 10-year yield slid two basis point to 0.855 percent after touching 0.795 percent, the lowest since May 17. Australia’s declined three basis points to 3.43 percent. The MSCI Asia Pacific Index of stocks dropped 2.4 percent and the Stoxx Europe 600 Index tumbled 1.3 percent. Weak Demand Treasury yields dropped even as a report today is forecast to show retail sales in the U.S. climbed in May by the most in three months. The 0.4 percent gain would follow a 0.1 percent advance in April, according to the median forecast of 83 economists surveyed by Bloomberg. The $21 billion 10-year sale yesterday drew a bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, of 2.53. It was the least since August. At an auction of $32 billion in three-year notes on June 11, the bid-to-cover ratio was 2.95, the smallest since December 2010. Yields have climbed this month as investors weighed whether the economy is strengthening enough for Federal Reserve Chairman Ben S. Bernanke to consider reducing bond purchases that have been used to keep borrowing rates low. The central bank’s Federal Open Market Committee meets June 18-19. The Fed is buying $85 billion of Treasuries and mortgage-backed securities each month to put downward pressure on borrowing costs. U.S. 10-year yields rose to 2.29 percent on June 11, the highest level in 14 months, on concern the Fed is preparing to curtail the purchases. Treasuries Oversold? Dan Fuss, whose Loomis Sayles Bond Fund (LSBDX) beat 97 percent of its peers in the past three years with 10 percent average returns, said he recently bought Treasuries as they were “pretty badly� oversold. Fuss, who is based in Boston for Loomis Sayles & Co., said in an interview he expects yields to rise longer term, with the 10-year rate probably reaching 3.2 percent by the end of 2014. Jim Rogers, the investor and author of the book “Street Smarts,� reiterated his view that the bull market in bonds is coming to an end, speaking at a conference in Kuala Lumpur. Benchmark 10-year yields declined from 15.8 percent in September 1981 to a record low of 1.38 percent in July of last year. Japanese money managers sold a net 386.9 billion yen ($4.1 billion) of foreign debt in the seven days ended June 7, a fourth week of sales, according to data today from the Ministry of Finance in Tokyo. “There is a relatively bearish bias� in the Treasury market, said Tomohisa Fujiki, an interest-rate strategist in Tokyo at BNP Paribas SA, whose New York unit is one of the 21 primary dealers that underwrite the U.S. debt. “The expectation for Fed tapering is the main theme in the market.� Ten-year yields will probably rise to 2.5 percent by year end, Fujiki said, adding that BNP Paribas increased its forecast from 2.4 percent earlier this month. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; 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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