Treasuries rose for a fourth day on the speculation the U.S. government’s stimulus plan may not be enough to turn the economy round any time soon as reports add to evidence the slump is deepening. The gains pushed the yield on the 10-year note down to near the lowest level in a week before data that may show retail sales shrank for a seventh month. An economic stimulus bill is headed for passage in Congress by the end of this week after lawmakers agreed on a $789 billion plan comprised of government spending and tax cuts. The Treasury is due to sell 30-year bonds today. “You could only expect refunding to stop this market from rallying if we had a positive reaction to this plan,” said Cyril Beuzit, head of interest-rate strategy in London at BNP Paribas SA. “The fact there is some disappointment means that supply is no longer” pushing prices lower. The yield on the 10-year note fell six basis points to 2.74 percent as of 10:32 a.m. in London. The 2.75 percent security due February 2019 rose 16/32, or $5 per $1,000 face amount, to 100 1/16. The two-year note yielded 0.87 percent, down four basis points to yesterday. Bond yields move inversely to prices. The stimulus package is smaller than the $838 billion bill approved earlier this week by the Senate or the $819 billion plan the House passed last month. Among the compromises were a reduction of tax cuts to $400 for individuals and $800 for families, from the $500 and $1,000 proposed by Obama. The yield on the 30-year bond declined three basis points to 3.42 percent before the sale of $14 billion of the bonds today. Record Debt Sales Investors bid for 2.07 times the amount of debt on offer at the last 30-year sale on Nov. 13. The average for the past 10 auctions is 2.18. The bonds were sold to yield 4.31 percent at the November auction. The government is issuing unprecedented amounts of debt as it raises money to battle the recession. It sold three- and 10- year securities earlier this week. The U.S. budget deficit widened more than economists forecast last month as spending soared and corporate tax receipts shrank, a Treasury report showed yesterday. The excess of spending over revenue in January rose to $83.8 billion, versus a $17.8 billion surplus a year earlier. Sales at U.S. retailers probably fell 0.8 percent in January, a Commerce Department report will show today, according to the median forecast in a Bloomberg News survey of 72 economists. A report from the Labor Department will show jobless claims stayed near 26-year highs, a separate survey showed. Stock Declines “Without the U.S. consumer stabilizing, it is difficult to paint any kind of sustainable picture of recovery,” Owen Job, an interest-rate strategist in London with Nomura International Plc, wrote in a report today. The stimulus package “will help but is likely to do little more than ameliorate the extent of the current slowdown,” he said. Treasuries extended their gains as stock markets fell, spurring demand for the safest assets. The Dow Jones Stoxx 600 Index of European shares dropped 1.4 percent, bringing its three- day loss to 4.5 percent. U.S. stock futures declined. Longer-term Treasuries rose yesterday, pushing 30-year bond yields to a two-week low, after U.S. Treasury Secretary Timothy Geithner failed to provide details on his financial-rescue strategy in an appearance before lawmakers. Lawmakers are working on a separate proposal comprised of spending programs and tax cuts that President Barack Obama said is necessary to spur the economy. TED Spread Yields suggest government and Federal Reserve efforts have yet to restore credit markets to where they were before trading froze last year. The difference between what banks and the Treasury pay to borrow for three months, the so-called TED spread, widened by one basis point to 94 basis points today. The spread averaged 27 basis points from 2002 through 2006, before the credit crisis began in August 2007. The London interbank offered rate, or Libor, for three-month dollar loans, increased to 1.23 percent yesterday. It was 1.08 percent on Jan. 14. Average 30-year fixed mortgage rates rose to 5.25 percent in the seven days ended Feb. 5 from 4.96 percent three weeks earlier, according to loan finance company Freddie Mac. Rates are about 2.26 percentage points higher than 10-year Treasury yields, widening from 1.62 percentage points five years ago.

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