By Anna Rascouet Nov. 25 (Bloomberg) -- U.S. Treasuries fell before a record $32 billion sale of seven-year notes and a report that may show personal spending rebounded in October. The 10-year note declined for the first time this week as stocks in Europe and Asia advanced. A Commerce Department report will say today purchases increased 0.5 percent in October after dropping by the same amount in September, according to a Bloomberg survey. The MSCI World Index gained 0.6 percent. The U.S. celebrates the annual Thanksgiving holiday tomorrow. “The seven-year is a tricky maturity and with the holiday looming, it’s an unfortunate timing for the auction,” said David Schnautz, a fixed-income strategist at Commerzbank AG in Frankfurt. “And if we see an upside surprise in data, this will also push bonds down.” The benchmark 10-year note yield climbed 2 basis points to 3.32 percent as of 9:24 a.m. in London, according to BGCantor Market Data. The 3.375 percent security due November 2019 fell 4/32, or $1.25 per $1,000 per face, amount to 100 14/32. The two-year yield was little changed at 0.74 percent. The seven-year security to be sold today yielded 2.84 percent in pre-auction trading. The previous sale of seven-year notes in October drew a high yield of 3.14 percent and attracted bids for 2.65 times the amount on offer, compared with a so- called bid-to-cover ratio of 2.79 times at the September sale. Yesterday’s offering of $42 billion in five-year notes drew a yield of 2.175 percent, compared with a survey forecast of 2.208 percent. A $44 billion sale of two-year securities on Nov. 23 drew a yield of 0.802 percent, the lowest ever. Treasury Losses Treasury holders have lost 1.7 percent so far this year, as measured by indexes compiled by Merrill Lynch & Co.. They are heading for the first loss since 1999, as the Federal Reserve and the U.S. government spent, lent or guaranteed $11.6 trillion to end the steepest economic recession since the 1930s. Minutes released yesterday of the Fed’s November meeting showed that while policy makers agreed the chances of excessive risk-taking and a dislodging of expectations for low inflation were “relatively low, they would remain alert to these risks.” “Most members projected that over the next couple of years, the unemployment rate would remain quite elevated and the level of inflation would remain below rates consistent over the longer run with the Federal Reserve’s objectives,” the minutes said. Policy makers indicated the benchmark lending rate would remain near zero “for an extended period” as long as inflation expectations are stable and unemployment fails to decline. The earliest policy makers will increase borrowing costs is in the third quarter of next year, according to a Bloomberg survey. To contact the reporter on this story: Anna Rascouet in London at arascouet@bloomberg.net

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