Treasuries dropped for the sixth day and European bonds fell on speculation a Federal Reserve program to boost the economy will be gradual. Greek bonds and U.S. futures retreated while commodities declined. The 10-year Treasury note yield rose five basis points to 2.69 percent at 8:30 a.m. in New York, and Germany’s 10-year bund yield rose six basis points to 2.58. The extra yield investors demand to hold Greek 10-year bonds instead of German bunds widened 40 basis points to 756 basis points, the most since Oct. 8. Standard & Poor’s 500 Index futures sank 0.5 percent, while the Stoxx Europe 600 Index fluctuated. The S&P GSCI Index of 24 commodities fell 0.9 percent, led by cotton. Reports yesterday showed consumer confidence rose more than expected and home prices unexpectedly increased, giving the Fed less reason to boost quantitative easing. The central bank may limit bond purchases to a few hundred billion dollars at next week’s meeting, the Wall Street Journal reported “Yields will rise whatever happens at the Fed meeting” next month, said Padhraic Garvey, head of developed-market debt at ING Groep NV in Amsterdam. “If they do less than anticipated, then people will think the economy is okay, and if they exceed expectations, they will think they’re doing too much and will create inflation.” The yield on the 30-year Treasury bond climbed four basis points to 4.03 percent, with the five-year note yield advancing five basis points to 1.30 percent, before the government sells $35 billion of the securities. Durable Goods Orders for U.S. non-military capital equipment excluding airplanes dropped in September, indicating gains in business investment will cool. Bookings for such goods, including computers and machinery meant to last at least three years, fell 0.6 percent after a 4.8 percent gain in August, figures from Commerce Department showed today in Washington. Total orders climbed 3.3 percent last month, led by doubling in aircraft demand. Another report at 10 a.m. may show sales of new houses rose last month to a 300,000 annual rate, near a record low. Greek 10-year bonds tumbled for the third consecutive day, with the yield jumping 58 basis points to 10.34 percent. Last year’s budget deficit will be revised above 15 percent of gross domestic product by the European Union, Finance Minister George Papaconstantinou said today in Limassol, Cyprus. The nation has serious tax compliance issues, he said. Bond Risk Credit-default swaps linked to Greek government debt climbed 51 basis points to 729, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of credit-default swaps on 15 governments increased 1.5 basis points to 142.5, the highest in two weeks, CMA data show. The Portuguese-German 10-year yield spread widened four basis points to 317 after the nation’s government and the Social Democrats, the country’s biggest opposition party, broke off talks on the 2011 budget proposal. The decline in U.S. futures indicated the S&P 500 may retreat for the first time in six days. About 85 percent of the companies in the S&P 500 that have reported earnings since Oct. 7 topped analysts’ predictions, according to data compiled by Bloomberg. Procter & Gamble Co. reported third-quarter profit from continuing operations of $1.02 a share. Analysts surveyed by Bloomberg had estimated profit of $1 on average. Comcast Corp. had net income of 31 cents a share, more than the 30-cent average in a Bloomberg survey. ConocoPhillips reported earnings of $1.50 a share, more than the $1.45 estimate in a survey of analysts. SAP, Deutsche Bank Basic-resource companies were the worst performers in Europe’s Stoxx 600, tracking declines in everything from nickel to sugar. Rio Tinto Group, the world’s third-largest mining company, slid 1.8 percent and oil producer BP Plc lost 1.1 percent. Nickel fell 1.7 percent, crude oil dropped 0.8 percent to $81.86 a barrel and raw sugar declined 1.2 percent. SAP AG, the biggest maker of business-management software, slumped 3 percent after earnings fell short of analysts’ estimates. Heineken NV tumbled 4.2 percent after reporting beer sales that missed estimates. Deutsche Bank AG, Germany’s largest lender, advanced 2.2 percent after posting a smaller-than- forecast loss, and STMicroelectronics NV, Europe’s biggest semiconductor maker, rallied 3.9 percent after saying sales will beat estimates this quarter. The dollar appreciated against all of its 16 major counterparts, gaining 0.4 percent to $1.3801 per euro and 0.4 percent to 81.74 yen. The Dollar Index, which tracks the U.S. currency against those of six trading partners, advanced for a second day, adding 0.3 percent. Cutting Bets “Although the scope of any further Fed easing remains a significant unknown, consecutive days of decent U.S. data have probably encouraged investors” to reduce bets the dollar will weaken, Gareth Berry, a currency strategist in Singapore at UBS AG, wrote in a report today. Norway’s krone was little changed versus the euro after the nation’s central bank kept its main rate at 2 percent, as forecast by all 18 economists in a Bloomberg survey. The krone was at 8.1392 per euro, from 8.1289 yesterday. The Australian dollar slumped against all 16 of its most traded peers after a report showed inflation accelerated less than forecast last quarter. The Aussie tumbled 1.3 percent to 97.24 U.S. cents, and fell 0.9 percent to 79.56 yen. The MSCI Emerging Markets Index lost 1.2 percent, falling for the first time in three days. The Shanghai Composite Index slipped 1.5 percent, the most in a month, while benchmark gauges in India, Turkey, Egypt and Thailand fell more than 1 percent. The Korean won tumbled 1 percent, the weakest in a week, after Bank of Korea Governor Kim Choong Soo said measures to limit capital inflows could be “useful.” South Africa’s rand depreciated 1 percent on speculation Finance Minister Pravin Gordhan will announce measures to weaken the currency at a mid- term budget speech later today. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net To contact the editor responsible for this story: Paul Sillitoe in London at psillitoe@bloomberg.net

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