Treasuries fell, paring a weekly advance, as concern that the euro area is heading toward deflation eased, damping speculation that the European Central Bank will announce further stimulus measures next week. The 10-year note yield climbed from a three-week low as data showed after euro-area inflation exceeded economist forecasts, damping demand for the safest assets. The Commerce Department will revise down U.S. economic growth in the fourth quarter, according to analysts surveyed before the report today. German government bonds fell for the first time in four days. ECB policy makers are scheduled to meet March 6. “Treasuries are being pushed lower in line with bunds,� said Michael Leister, a senior fixed-income strategist at Commerzbank AG in London. “Investors are relieved that this disinflation debate or the risks in that regard have lost some of their momentum. What the market is doing is scaling back easing expectations for next Thursday’s ECB meeting.� VIDEO: ECB's Draghi News Conference After G-20 Meeting Benchmark 10-year yields rose two basis points, or 0.02 percentage point, to 2.66 percent at 7:29 a.m. New York time, Bloomberg Bond Trader data show, after declining to 2.63 percent, the lowest level since Feb. 7. The 2.75 percent note due February 2024 fell 5/32, or $1.56 per $1,000 face amount, to 100 26/32. Germany’s 10-year bund yield climbed five basis points to 1.61 percent, the biggest increase since Feb. 6. The Treasury 10-year rate has decreased seven basis points this week, the biggest drop since the period ended Jan. 31. VIDEO: ECB's Draghi News Conference After G-20 Meeting Yield Forecasts The yield will be 3.37 percent by year-end, according to a Bloomberg survey of economists, with the most recent forecasts given the heaviest weightings. Commerzbank predicts it will climb to 3.40 percent by the end of the year. Consumer prices in the euro region rose an annual 0.8 percent in February, the same pace as in the previous two months. That exceeded the median estimate of 0.7 percent in a Bloomberg News survey. Accelerating inflation reduces the allure of bonds by eroding the value of their fixed payments. U.S. fourth-quarter gross domestic product will be revised to 2.5 percent from the 3.2 percent estimated last month, according to analysts surveyed by Bloomberg News before the report today. STORY: The Lurking Threat of Deflation Data will show consumer confidence was unchanged, pending home sales gained in January and business activity in the Chicago area slowed for a fourth month in February, based on responses to separate Bloomberg surveys. Yellen Comments Federal Reserve Chair Janet Yellen yesterday repeated the central bank’s statements that it intends to reduce its debt-purchase monetary stimulus program at a “measured� pace, and she said they are likely to end in the fall. The Fed reduced its monthly asset purchases by $10 billion a month in January and February, to $65 billion. STORY: Colombia Keeps Its Peso Weak Unseasonably cold weather has played a role in damping recent reports on the economy, Yellen said yesterday before the Senate Banking Committee. “What we need to do, and will be doing in the weeks ahead, is to try to get a firmer handle on exactly how much of that set of soft data can be explained by weather and what portion, if any, is due to softer outlook.� Volatility in U.S. government securities as measured by the Bank of America Merrill Lynch MOVE Index rose for a second day yesterday, climbing to 58.14 from 57.79. That compares with an average of 71.94 over the past 12 months. The Bloomberg U.S. Treasury Bond Index (BUSY) rose 0.5 percent this week through yesterday. It’s up 0.3 percent in February. STORY: Greece Needs Debt Forgiveness 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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