Treasuries rose, pushing the 10-year yield to the lowest in almost a month, as unrest in Libya drove investors to the safety of U.S. debt and raised concern that higher oil prices will dent the economic recovery. U.S. two-year yields fell to within one basis point of the lowest since Feb. 3 on speculation Federal Reserve Chairman Ben S. Bernanke will repeat his pledge to keep interest rates close to a record low. Growth in U.S. personal spending slowed to 0.4 percent last month, from 0.7 percent in December, according to the median estimate of 59 economists surveyed by Bloomberg News before the report today. “With oil futures trading close to the $100 level again, this flight to quality is the key driver pushing Treasuries higher,” said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf, Germany. “It’s difficult to give a credible judgment on where Libya or that situation will end up.” Ten-year yields were little changed at 3.41 percent as of 7:25 a.m. in New York, according to BGCantor Market Data, after reaching 3.39 percent, the least since Feb. 1. The 3.625 percent security maturing in February 2021 traded at 101 25/32. Two-year yields were also little changed, at 0.72 percent. Oil traded near a 29-month high in New York as turmoil that has cut Libya’s output spread to Oman. Crude for April delivery rose as much as $2.08, or 2.1 percent, to $99.96 a barrel in New York before trading at $98.28. The MSCI World Index of shares added 0.3 percent while futures on the Standard & Poor’s 500 Index were little changed. Curb Inflation U.S. officials are scheduled to meet their foreign counterparts in Geneva today to discuss Libya, including measures to pressure Muammar Qaddafi out of power while building ties to opposition leaders. Fed Vice Chairman Janet Yellen pledged to curb any inflationary surge generated by an increase in oil prices after futures posted the biggest weekly gain in two years last week. The Fed won’t “sit by” if higher oil prices are passed through to other costs, Yellen said on Friday in New York. Bernanke is scheduled to give testimony to the Senate Banking Committee tomorrow, at which he may repeat that the central bank plans to keep interest rates near a record low for an “extended period.” Fed Purchases The U.S. will today auction $62 billion of 3- and 6-month bills. The Fed is scheduled to buy as much as $7 billion of notes due from August 2013 to February 2015 as part of its plan to buy $600 billion of debt by June 30 to sustain the expansion. Treasuries still headed for a decline this month on speculation central bank efforts to spur growth will boost the economy in 2011. An index of returns on U.S. government debt fell 0.2 percent as of Feb. 25, according to Bank of America Merrill Lynch. The measure was little changed in January, after falling 2.7 percent in the fourth quarter of 2010. Bond market investors are showing the greatest confidence in global economic growth since the credit markets crashed three years ago. Yields on debt securities are rising for a fourth month as prices fall, the longest stretch since June 2008, according to Bank of America’s Global Broad Market Index, which tracks the performance of more than 19,000 securities with a market value of about $39 trillion. While the highest-rated debt, from U.S. Treasuries to Microsoft Corp. debentures, is falling, the riskiest company notes are returning the most in eight years. “We’ve just experienced the first several months of a bear market in bonds,” said Michael Hyman, head of investment-grade credit in Atlanta at ING Investment Management, which oversees about $518 billion. Fund managers became more bearish on the outlook for Treasuries through June, according to a weekly survey by Ried Thunberg ICAP Inc. Ried’s sentiment index fell to 44 for the seven days ended Feb. 25 from 45 the week before. A figure less than 50 indicates investors expect prices to decline. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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