Treasuries rose for a second day before a report economists said will show consumer prices climbed at a slower pace than the Federal Reserve’s 2 percent long-term objective. The gains pushed 10-year yields below 2 percent even as the Federal Reserve signaled it may slow the pace of asset purchases. Treasuries have outperformed their inflation- protected counterparts this month, delivering an annualized 1 percent decline compared with a loss of 12 percent for those that protect against price increases, according to Bank of America Merrill Lynch indexes. The U.S. is scheduled to sell $9 billion of 30-year TIPS today. “Inflation’s not worrisome,� said Kei Katayama, who buys non-yen debt in Tokyo for Daiwa SB Investments Ltd., which manages the equivalent of $53 billion and is a unit of Japan’s second-largest brokerage. “It may increase eventually, but the current mix of slow growth and relatively high unemployment means there’s not much pressure for inflation.� U.S. 10-year rates fell one basis point, or 0.01 percentage point, to 2 percent at 8:13 a.m. London time, according to Bloomberg Bond Trader data. The price of the 2 percent security due February rose 1/8, or $1.25 per $1,000-face amount, to 100.01. U.S. consumer prices increased 0.1 percent in January from the month before, after being unchanged in December, according to a Bloomberg News survey of economists before the Labor Department report at 8:30 a.m. in Washington. Annual inflation slowed to 1.6 percent from 1.7 percent, the survey shows. The figure was as high as 14.8 percent in 1980. To contact the reporters on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@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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