Treasury 10-year note yields touched 2 percent for the first time in two weeks as gains in European stocks reduced demand for a refuge before today’s auction. Traders demanded an additional 1.74 percentage points to buy 10-year Treasuries instead of two-year notes, compared with the average of 1.58 for the past decade. U.S. debt securities fluctuated as Greece’s Prime Minister Lucas Papademos prepared to meet with the nation’s political leaders 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 SA in London. “This rise in yields should be looked at in the context that yields are near record lows.� Yields on 10-year notes rose less than one basis point, or 0.01 percentage point, to 1.98 percent at 6:31 a.m. New York time, according to Bloomberg Bond Trader prices. The 2 percent securities maturing in November 2021 fell 1/32, or 31 cents per $1,000 face amount, to 100 5/32. The yields touched 2 percent for the first time since Jan. 25. The Stoxx Europe 600 index of shares gained 0.3 percent. The Dow Jones Industrial Average advanced yesterday to the highest level since May 2008. German 10-year bonds dropped for a second day, with yields rising as much as four basis points to 2.01 percent on bets Greece is close to securing a debt deal that would allow it to get a bailout fund needed to repay debt maturing on March 20. U.S. Note Auction The U.S. 10-year notes scheduled for sale today yielded 2.03 percent in pre-auction trading, compared with the record low of 1.90 percent the last time the securities were sold 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. 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 instead of bonds, according to Laurence D. Fink, chief executive officer of BlackRock Inc., the world’s largest money manager. BlackRock on Risk “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. The U.S. central bank announced Jan. 25 that it will hold its target for overnight bank lending at virtually 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 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, 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. To contact the reporters 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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