Treasuries rose, snapping a decline from yesterday, as a slide in European and Asian stocks increased demand for the safest assets. U.S. government securities rallied as traders prepared to bid for $29 billion of seven-year debt today in the last of three note sales this week. Treasuries have handed investors a 1.2 percent loss this quarter, according to Bank of America Merrill Lynch indexes, as signs of improvement in the economy cut demand for the relative safety of the nation’s debt. The benchmark 10-year yield fell two basis points to 2.19 percent at 6:13 a.m. in New York, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2022 rose 1/8, or $1.25 per $1,000-face amount, to 98 11/32. The yield climbed two basis points, or 0.02 percentage point, yesterday. The Stoxx Europe 600 Index of shares dropped 0.8 percent, and the MSCI Asia Pacific Index declined 0.6 percent. The U.S. seven-year notes being sold today yielded 1.6 percent in pre-auction trading, compared with 1.418 percent at the previous offering of the securities on Feb. 23. Investors bid for 3.11 times the amount offered last month, compared with an average of 2.86 for the past 10 auctions. Primary dealers, the 21 companies that underwrite the U.S. debt, purchased 38.9 percent of the securities, the least since December 2010 at the monthly auctions. Direct bidders, non-primary dealers buying for their own accounts, bought 19.3 percent, the most since the Treasury Department revived sales of the notes in February 2009. Further Options The U.S. economic recovery isn’t assured and policy makers don’t rule out further options to boost growth, Fed Chairman Ben S. Bernanke said on March 27, according to a transcript of an interview with ABC News provided by the network. Ten-year Treasuries have underperformed German bonds this year, with the extra yield investors demand to hold the U.S. securities widening to 37 basis points yesterday, the most since February 2011. The spread was 36 basis points today. German bonds are little changed this year, according to the Merrill Lynch indexes. The Fed is replacing $400 billion of shorter-term Treasuries in its holdings with longer maturities as part of its efforts to hold down borrowing costs. Traders call it Operation Twist after a similar effort in 1961 to contain borrowing costs for companies and consumers. Policy makers said the goal of the plan is to put downward pressure on long-term interest rates. The Fed plans to sell as much as $8.75 billion of Treasuries maturing from June 2014 to March 2015 today as part of the program. 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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