Treasuries fell as an advance in stocks sapped demand for the safest assets before reports forecast by economists to show U.S. leading economic indicators and Philadelphia-area manufacturing increased. Seven-year note yields rose to a two-month high as European Union and International Monetary Fund officials traveled to Dublin to discuss a possible aid package for Ireland’s banks. Spain sold 3.65 billion euros ($4.97 billion) of bonds at an auction today at lower yields than similar traded securities. “Firmer equity markets in Asia and Europe give hope that the U.S. might have a good day as well, and that should give a boost to yields,” said Marc Ostwald, a strategist at Monument Securities Ltd. in London. “Signs of optimism from Ireland will reduce the need for safety, but we’re still in a very choppy environment.” Ten-year note yields climbed five basis points, or 0.05 percentage point, to 2.93 percent at 7:20 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in November 2020 fell 14/32, or $4.38 per $1,000 face amount, to 97 11/32. Seven-year yields gained as much as seven basis points to 2.21 percent, the highest level since Sept. 13. The MSCI World Index rose 0.5 percent. The Stoxx Europe 600 Index of shares rose 1.1 percent. Futures on the Standard & Poor’s 500 Index climbed 1.1 percent. Aid for Ireland The Irish central bank governor, Patrick Honohan, said he expects the country to tap a loan from the European Union and International Monetary Fund worth “tens of billions.” The country may pay an interest rate close to 5 percent, Honohan said in an interview with the state broadcaster RTE today. “Positive news from Ireland will put pressure on Treasuries as they lose their safe-haven appeal,” said Marius Daheim, a senior fixed-income strategist at Bayerische Landesbank in Munich. “That’s going to be a key driver today. It’s also going to hinge on the economic data.” The euro strengthened for a second day against the dollar, rising 0.9 percent to $1.3653 after touching a seven-week low on Nov. 16. Spain sold 2.59 billion euros of 10-year bonds and 1.07 billion euros of 30-year debt, just below the maximum target of 4 billion euros, the Treasury said. The U.S. will announce today the sizes of three Treasury note sales scheduled for next week. The government may sell $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, a Bloomberg News survey of primary dealers showed. A $99 billion total would match the amount of the October sales of the securities. President Barack Obama has increased U.S. marketable debt to a record $8.54 trillion. Leading Indicators The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent in October in the biggest gain since May, according to the median forecast of 58 economists in a Bloomberg News survey. 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 held near a four-month low. 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. The central bank is scheduled today to buy $6 billion to $8 billion of Treasuries maturing from May 2013 to November 2014, according to the New York Fed’s website. Policy makers plan to pump $600 billion into the economy through June by purchasing government bonds, and it’s snapping up debt every day this week under the program known as quantitative easing. Yield Outlook The 10-year yield will fall to 2.56 percent by year-end, according to a Bloomberg News survey of banks and securities firms, with the most recent forecasts given the heaviest weightings. “The fair value of U.S. 10-year yields is 2.5 percent,” Padhraic Garvey, head of developed-markets debt strategy at ING Groep NV in Amsterdam, wrote via e-mail today. “Bottom line, there is room for U.S. Treasuries to have a decent rally from here should there be any kind of macro weakness or a move to risk-off.” To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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