Treasuries failed to rebound from a loss yesterday as analysts said reports today will show increases in an index of U.S. leading economic indicators and Philadelphia-area manufacturing. Seven-year yields approached a two-month high as the U.S. prepared to announce the sizes of three Treasury sales scheduled for next week. The government will auction $35 billion of two- year notes, $35 billion in five-year debt and $29 billion of seven-year securities over three days starting Nov. 22, based on forecasts in a Bloomberg News survey of primary dealers. “I’m bearish,” said Yusuke Tanaka, senior dealer at Mitsubishi UFJ Trust & Banking Corp. in Singapore, part of Japan’s largest bank. “The economy is improving.” Ten-year yields climbed one basis point to 2.89 percent as of 6:00 a.m. in London, according to BGCantor Market Data. The 2.625 percent security due in November 2020 fell 2/32, or 63 cents per $1,000 face amount, to 97 23/32. Seven-year rates rose two basis points to 2.16 percent. They reached 2.20 percent on Nov. 16, the most since Sept. 13. Tanaka said he would consider buying if Treasury yields climb 10 basis points, or 0.01 percentage point. The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent in October, the biggest gain since May, based on a Bloomberg News survey of economists. The Federal Reserve Bank of Philadelphia’s general economic index increased to 5 in November from 1 a month earlier, another survey showed. Another report today may say jobless claims last week held near a four-month low. Stocks Advance U.S. bonds also fell as Asian stocks gained, eroding demand for the relative safety of sovereign debt. The MSCI Asia Pacific Index of shares rose 1.3 percent, the most in two weeks. Next week’s $99 billion in auctions match the total of the October sales of the securities. President Barack Obama has increased the U.S. marketable debt to a record $8.54 trillion. The Fed is scheduled to buy $6 billion to $8 billion of Treasuries maturing from May 2013 to November 2014 today, according to its website. It plans to pump $600 billion into the economy through June by purchasing government bonds, and it is snapping up debt every day this week under the program. The euro rose for a second day against the dollar on speculation a bailout for Ireland will prevent contagion in Europe’s larger debt markets. The shared currency strengthened as European Union and International Monetary Fund officials traveled to Dublin to discuss a possible aid package for Ireland’s banking sector. Spain is scheduled to sell 10- and 30-year debt today. Decelerating Inflation Treasury bulls say decelerating inflation is reason to buy. Consumer prices excluding food and fuel rose 0.6 percent in October from the year before, the smallest year-over-year gain in data going back to 1958, the Labor Department said yesterday. “Treasuries are attractive,” said Tsutomu Komiya, who handles U.S. debt for Daiwa Asset Management Co. in Tokyo, which oversees the equivalent of $103.5 billion. “Inflation is too subdued. The Fed is going to keep its rate on hold.” Thirty-day federal funds futures contracts for delivery in March 2012 yielded 0.505 percent, indicating investors expect the central bank to increase borrowing costs by that month from current levels. The central bank has kept the so-called fed funds rate, its target for overnight lending between banks, in a range of zero to 0.25 percent since December 2008. Fed Critics The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the securities, was 2.09 percentage points. The figure matches the five-year average. Government debt fell yesterday as the four top Republicans in Congress joined in criticizing the Fed’s bond-purchase plan. “While intended to improve the short-term growth of the U.S. economy and help maintain a stable price level, such a measure introduces significant uncertainty regarding the future strength of the dollar,” the letter said. The purchases could “result both in hard-to-control, long-term inflation and potentially generate artificial asset bubbles.” To contact the reporter on this story: 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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