Treasuries fell for a second day, the first back-to-back loss in two weeks, as gains in stocks reduced investor appetite for debt before the U.S. sells 10-year notes today and 30-year bonds tomorrow. Traders demanded an additional 1.74 percentage points to buy 10-year Treasuries instead of two-year notes, versus the average of 1.58 percentage points for the past decade. Investors should hold stocks instead of bonds, said Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager. Greek Prime Minister Lucas Papademos is scheduled to meet the nation’s political leaders today to negotiate terms to unlock a 130 billion-euro ($172.5 billion) rescue package. “There is an element of improving risk appetite here that is pushing government yields higher,� said Luca Jellinek, head of European interest-rate strategy at Credit Agricole Corporate & Investment Bank in London. “Although this rise in yields should be looked at in the context that yields are near record lows.� The U.S. 10-year yield rose two basis points to 1.99 percent at 9:14 a.m. in London, according to Bloomberg Bond Trader prices. The 2 percent note due November 2021 fell 5/32, or $1.56 per $1,000 face amount, to 100 2/32. Stocks Surge The Stoxx Europe 600 index of shares gained 0.6 percent. The Dow Jones Industrial Average advanced to the most since May 2008 yesterday. The 10-year notes scheduled for sale today yielded 2.04 percent in pre-auction trading, compared with the record low of 1.90 percent the last time the securities were sold on Jan. 11. Investors bid for 3.29 times the amount of debt offered in January, versus the average of 3.11 for the past 10 auctions. Today’s sale is for $24 billion. German 10-year bonds dropped for a second day, with yields rising three basis points to 1.99 percent. A sale of three-year Treasuries yesterday drew a yield of 0.347 percent, compared with a forecast of 0.346 percent in a Bloomberg News survey of seven of the Federal Reserve’s 21 primary dealers, companies that underwrite the U.S. debt. The U.S. is scheduled to conclude this week’s auctions with a $16 billion sale of 30-year bonds tomorrow. The three offerings will raise $22.4 billion of new cash, with maturing securities totaling $49.6 billion. Investors should hold stocks for their return relative to bonds and low valuations, BlackRock’s Fink said. “You need to take on more risk,� Fink said on Bloomberg Television’s “First Up� with Susan Li in Hong Kong. Treasuries will have minimal returns with the Fed keeping interest rates low, he said. New York-based BlackRock oversees $3.51 trillion. Fed Rates U.S. central bankers announced Jan. 25 they will hold their target for overnight bank lending near zero until at least late 2014. Fed Chairman Ben S. Bernanke said policy makers were considering buying bonds to sustain the expansion. The central bank is in the process of replacing $400 billion of shorter-maturity Treasuries in its holdings with longer-term debt to cap borrowing costs and spur the economy under a program it plans to conclude in June. The Fed is scheduled to buy as much as $2 billion of bonds due from February 2036 to November 2041 today as part of the plan, according to the New York Fed’s website. It also plans to sell as much as $8.75 billion of Treasuries maturing from June to November 2013, the website shows. To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@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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