By Lukanyo Mnyanda Nov. 10 (Bloomberg) -- Ten-year Treasuries rose for a third day as a report showing German investor confidence declined this month more than economists forecast prompted investors to seek safety in fixed income. The notes headed for the longest winning run in more than a month as futures on the Standard & Poor’s 500 Index declined. The securities rose even as the government prepared to sell a record $25 billion sale of 10-year notes today. Barclays Plc, the U.K.’s second-largest lender, reported a 54 percent decline in third-quarter net income. “The correlation between stocks and bonds is still holding,” said Glenn Marci, a fixed-income strategist in Frankfurt at DZ Bank AG, Germany’s biggest cooperative lender. “The data was bond positive, though this may not last.” The yield on the 10-year note fell 2 basis points to 3.46 percent as of 6:30 a.m. in New York, according to BGCantor Market Data. The 3.625 percent security maturing in August 2019 gained 6/32, or $1.88 per $1,1000 face amount, to 101 10/32. Ten-year yields will rise to 3.82 percent by the middle of next year, according to a Bloomberg survey of banks and securities companies, with the most recent forecasts given the heaviest weightings. Futures on the S&P 500 Index expiring in December declined 0.2 percent. Europe’s Dow Jones Stoxx 600 Index lost as much as 0.3 percent. ZEW Data The ZEW Center for European Economic Research in Mannheim said its index of German investor and analyst expectations, which aims to predict developments six months ahead, dropped to 51.1 from 56 in October. The median forecast in a Bloomberg News survey of 39 economists was for a decline to 55. Bonds were little changed earlier as some traders bet that the government will struggle to find buyers for record amounts of Treasury issuances as the economy shows signs of recovering and investors switch to higher-yielding assets. A rebound in stocks is “re-liquifying” the economy, Former Federal Reserve Chairman Alan Greenspan said. The 10-year yield may rise to 4 percent by year-end, according to Peter Chatwell, a fixed-income strategist in London at Calyon, the investment-banking unit of Credit Agricole SA. “Supply is going to have more of an impact, on the 10-year at least,” Chatwell said. “Now that the New York Fed is no longer executing asset purchases, we think Treasuries are going to be under pressure.” ‘Very Fortunate’ The U.S. sold $40 billion in three-year securities yesterday and is scheduled to auction $16 billion of 30-year bonds on Nov. 12, pushing sales this week to $81 billion. The Treasury is selling unprecedented amounts of debt as President Barack Obama borrows to fund his stimulus programs. U.S. marketable debt stands at $6.95 trillion and reached a record $7.01 trillion in September. “We have been very fortunate that the stock markets moved back” and are “re-liquifying the whole process,” Greenspan said yesterday at an event in Edmonton, Alberta, presented by Abu Dhabi National Energy Co., the state-controlled energy producer. Treasuries have handed investors a 2.7 percent loss in 2009, according to indexes compiled by Bank of America Corp.’s Merrill Lynch unit. German notes earned 1.6 percent in the same period, Merrill’s indexes show. Fitch Ratings said there is no near-term risk to the U.S.’s top-level AAA debt ranking, according to a report by Reuters published on the Guardian newspaper’s Web site. The rating may come under pressure if the U.S. fiscal position does not stabilize in the next few years, according to the report, citing David Riley, co-head of sovereign global ratings. Fitch would have to review its AA- rating on Japan if there were a material increase in debt issuance above the current 44 trillion yen ($489.7 billion) in the next fiscal year, which starts April 1, according to the article. The U.K.’s sovereign credit rating is most at risk among top-rated nations, Fitch said a statement that it sent to Bloomberg in an e-mail. To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net

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