Treasuries stayed lower after falling yesterday as Asian stocks rose and economists said government data tomorrow will show U.S. initial claims for jobless insurance approached a four-year low. “As long as the labor market is healthy, I’m not worried about the U.S. economy,� said Tsutomu Komiya, who helps oversee the equivalent of $111 billion as an investor in Tokyo at Daiwa Asset Management Co., a unit of Japan’s second-biggest brokerage. “Yields will rise� in the months ahead. Benchmark 10-year notes yielded 2.01 percent as of 7:17 a.m. in London, according to Bloomberg Bond Trader prices. The 2 percent security due in February 2022 changed hands at 99 29/32. The rate has risen from the record low of 1.67 percent set on Sept. 23, and it compares with the average of 3.84 percent for the past decade. It will be 2.5 percent by year-end, Komiya said. Treasury Inflation Protected Securities are surging on investor demand for insurance against rising costs as the economy improves. An index of the bonds has rallied 2.6 percent this year, versus a 0.2 percent loss for conventional debt, Bank of America Merrill Lynch data show. Thirty-year bonds, among the most sensitive to inflation because of their long maturities, tumbled 4 percent, the figures show. The U.S. plans to sell $16 billion of five-year TIPS tomorrow. The MSCI Asia Pacific Index (MXAP) of stocks gained 1.2 percent, the most in three weeks. The difference between yields on 10-year notes and same- maturity TIPS, a gauge of trader expectations for consumer prices over the life of the debt, has widened to 2.30 percentage points from 1.95 percentage points at the end of 2011. U.S. Consumer Prices U.S. consumer prices rose 2.7 percent in March from a year earlier, slowing from 2.9 percent in February, the Labor Department said on April 13. Ten-year Treasuries yield negative 0.69 percent after accounting for costs in the economy. The so- called real yield has been less than zero for almost a year. U.S. weekly jobless applications probably dropped to 370,000 from 380,000, a Bloomberg News survey of economists showed before Labor reports the figure tomorrow. Existing home sales, compiled by the National Association of Realtors, rose 0.7 percent in March, after falling 0.9 percent in February, another survey shows. Initial claims were as low as 361,000 in February, a level not seen since April 2008. The U.S. has added jobs for 18- straight months. Payroll growth slowed to 120,000 in March from 240,000 in February. IMF Forecasts The International Monetary Fund raised its forecast for U.S. economic expansion this year to 2.1 percent from 1.8 percent. It also said in its report yesterday that recent improvements are “very fragile.� Japan’s 10-year yield was unchanged at 0.935 percent, versus this year’s low of 0.93 percent set this week. The Treasury Department is scheduled to announce tomorrow the size of three note sales scheduled for next week. The U.S. will probably auction $35 billion of two-year securities on April 24, the same amount of five-year debt on the following day and $29 billion of seven-year notes on April 26, according to Wrightson ICAP LLC, an economic advisory company in Jersey City, New Jersey, that specializes in government finance. Treasuries fell yesterday after Spain raised more than its maximum target at a bill auction, reducing demand for safer assets. U.S. 10-year rates increased two basis points, or 0.02 percentage point. Spain Auction U.S. yields will stay low, said Will Tseng, who trades Treasuries at Taipei-based Shin Kong Life Insurance Co., which has the equivalent of $52.6 billion in assets and is Taiwan’s third-largest life insurer. Spanish officials are struggling to improve the nation’s economy, he said. Spain is scheduled to auction two- and 10-year debt tomorrow, a test of demand for long-term obligations from the nation after surging rates there this month helped increase demand for Treasuries. The nation’s 10-year yield rose to 6.16 percent on April 16, the most since Dec. 1 and approaching the 7 percent level that pushed Greece, Ireland and Portugal to seek rescue packages. Tseng said he also questions the health of the U.S. housing market and banking systems. “A lot of issues have not been solved,� he said. Tseng said he wants to see 10-year rates in a range of 2.10 percent to 2.15 percent to get him to buy. The Fed has pledged to keep its target for overnight lending at almost zero until at least late 2014 to support the expansion. It’s also replacing $400 billion of shorter-term debt in its holdings with longer maturities to keep borrowing costs down. The central bank plans to buy as much as $5 billion of Treasuries due from May 2020 to February 2022 today as part of the plan. It’s scheduled to sell as much as $8.75 billion of Treasuries due from February 2013 to January 2014, according to the Fed Bank of New York website. To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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