Treasuries headed for a third monthly decline amid speculation the Federal Reserve will trim its bond buying this year and may comment on the path for its purchases after a policy meeting today. U.S. government securities generated a loss of 0.2 percent in July through yesterday, according to the Bloomberg U.S. Treasury Bond Index. (BUSY) The MSCI All-Country World Index of shares returned 5 percent including reinvested dividends. The difference is the most since a gap of 5.6 percentage points in January. Economists say a government report today will show U.S. gross-domestic-product growth slowed last quarter, while data on Friday will show the unemployment rate declined. “I don’t think the Fed is going to say anything that would change market expectations that the economic recovery is still solid enough for the Fed to start tapering bond purchases this year,� said Padhraic Garvey, head of developed-market debt strategy at ING Groep NV in Amsterdam. “The Treasury market is likely to move in a tight range into the decision today and jobs data on Friday.� The benchmark 10-year yield was little changed at 2.61 percent at 7:01 a.m. New York time, according to Bloomberg Bond Trader data. The price of the 1.75 percent note maturing in May 2023 was 92 5/8. The yield, which has climbed 12 basis points this month, will end the year at 2.63 percent, according to the weighted-average forecast in a Bloomberg News survey of economists. Slower Growth U.S. GDP expanded at a 1 percent pace in the April-to-June period, versus 1.8 percent in the previous three months, according to a Bloomberg survey before today’s report. The jobless rate fell to 7.5 percent this month, from 7.6 percent in June, a separate survey showed before the Labor Department releases the figures on Aug. 2. The Fed, which has been buying $85 billion of bonds each month to put downward pressure on borrowing costs, will probably start reducing purchases in September, based on a Bloomberg survey. Today’s statement is scheduled for 2 p.m. in Washington. Treasury trading volume at ICAP Plc, the largest inter-dealer broker of U.S. government debt, rose 7.2 percent to $208.9 billion yesterday, still less than this month’s daily average of $270.7 billion. Volume has declined from June’s average of $446.2 billion a day. Volatility in Treasuries as measured by the Merrill Lynch Option Volatility Estimate MOVE Index was 83.27 basis points yesterday. The figure has fallen from 117.89 on July 5, which the highest level since December 2010. Spread Widens The difference between two- and 30-year yields widened to the most since September 2011 before today’s GDP report. The spread increased to as much as 338 basis points today, having expanded from this year’s low of 260 basis points on April 23. A steeper yield curve reflects diminishing demand from investors for longer-maturity bonds as they anticipate quicker economic growth and inflation. The U.S. is scheduled to announce today the size of three-, 10- and 30-year government debt auctions due for next week. The Treasury said this week it will borrow about 6.3 percent less than it projected three months ago in the July-to-September period as a stronger economy helps narrow the nation’s budget deficit. The government will cut sales by $40 billion to $100 billion during the next year, a survey of the 21 primary dealers that are obligated to bid at U.S. bond auctions showed. About two-thirds of those responding, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., see reductions this year, possibly as soon as next month. 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 ‘ or pdobson2@bloomberg.net

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