Treasuries rose, pushing 10-year yields down for the first time in nine days, as International Monetary Fund Managing Director Christine Lagarde warned over the weekend against a false sense of economic security. Benchmark yields fell from the highest level since October on speculation last week’s increase of 27 basis points was excessive. Thirty-year bonds gained for a second day as Federal Reserve Bank of New York President William Dudley prepared to speak today after the central bank raised its assessment of the economy last week. “U.S. yields have reached technically significant levels, so it is not that easy to go higher from here,� said Piet Lammens, head of research at KBC Bank NV in Brussels. “There are still risks in Europe. We think the rally in yields will continue, that the market is taking a breather at this technical level, and eventually other sellers will appear.� Yields on 10-year notes fell three basis points, or 0.03 percentage point, to 2.27 percent at 8:07 a.m. in New York, according to Bloomberg Bond Trader prices. The 2 percent securities maturing in February 2022 rose 1/4, or $2.50 per $1,000 face amount, to 97 5/8. The yields climbed on March 16 to 2.36 percent, the highest level since Oct. 28. “Optimism should not give us a sense of comfort or lull us into a false sense of security,� Lagarde said yesterday at a speech at the China Development Forum in Beijing. El-Erian on Europe Mohamed A. El-Erian, chief executive officer at Pacific Investment Management Co. in Newport Beach, California, was quoted by the German news magazine Der Spiegel that the situation in Europe remains “dramatic� and that although it looks as if things will work out in Italy and Spain, the Greek rescue package “will quickly fall apart.� The first rescue package for the Portuguese will prove insufficient and the country will ask the euro region for more money, Der Spiegel quoted El-Erian as saying. Thirty-year bond yields fell two basis points to 3.39 percent after advancing 23 basis points last week. German 10-year bunds rose, with yields dropping four basis points to 2.01 percent. The Stoxx Europe 600 Index of fell 0.2 percent. Treasury 10-year yields increased last week the most in eight months after the Fed raised its assessment of the U.S. economy, damping speculation it will announce a further round of debt purchases. The central bank is poised to buy as much as $5.25 billion of Treasuries today maturing from May 2020 to February 2022 as part of its plan to buy $400 billion in longer-term maturities by the end of June to boost the economy. BlackRock’s View BlackRock International Ltd. prefers corporate bonds to U.S. Treasuries and German bunds because they offer better value, John Maskell, London-based head of global rates, said on Bloomberg Television. The company recommends being underweight core-nation bonds and buying debt in the auto industry, where there are good growth prospects, he said in an interview with Linzie Janis on Bloomberg Television’s “Countdown.� Confidence among U.S. homebuilders climbed this month, a report today is projected to show. The National Association of Home Builders/Wells Fargo index of builder confidence rose for a sixth straight month, advancing to 30 from 29 in February, according to the median forecast of economists in a Bloomberg News survey before today’s report. Treasuries have lost 1.8 percent this year as of March 16, according to Bank of America Merrill Lynch indexes. The MSCI All Country World Index (MXWD) of stocks has gained 13 percent including reinvested dividends, data compiled by Bloomberg show. Ten-year yields will increase to 2.52 percent by year-end, according to the average forecast in a Bloomberg News survey, with the most recent projections given the heaviest weightings. To contact the reporters on this story: Emma Charlton in London at echarlton1@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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