Treasuries rose for a seventh day on concern the euro debt crisis is worsening after the International Monetary Fund said Greece faces a financing gap that won’t be solved by budget measures being discussed. Benchmark 10-year yields dropped to the lowest level in two weeks after IMF Director General Christine Lagarde said yesterday that global growth will probably be weaker than the organization projected in July. Two-year notes were little changed before the U.S. government sells $35 billion of the securities today. “Treasury yields are exceptionally low but it is justified as long as the crisis in the euro zone drags on,� said Peter Chatwell, a fixed-income strategist at Credit Agricole Corporate and Investment Bank in London. “We need to see further abating in the euro debt crisis for Treasury yields to rise.� The 10-year yield dropped two basis points to 1.69 percent at 10:03 a.m. in London, according to Bloomberg Bond Trader prices. The 1.625 percent note maturing in August 2022 rose 6/32, or $1.88 per $1,000 face amount, to 99 13/32. The yield is at the lowest since Sept. 11. Treasuries reached the most expensive level in two weeks today. The 10-year term premium, a model created by economists at the Fed that includes expectations for interest rates, growth and inflation, was negative 0.91 percent, the most costly since Sept. 10. A negative reading indicates investors are willing to accept yields below what’s considered fair value. 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: Paul Dobson at pdobson2@bloomberg.net

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