By Deborah Levine, MarketWatch NEW YORK (MarketWatch) -- Treasury prices gained on Wednesday, pushing yields down for the first day in four, after a government report showed consumer spending rose less than expected and inflation remained tame last month. Yields on 10-year notes (UST10Y 3.71, -0.04, -0.99%) fell 5 basis points to 3.71%, after closing on Tuesday at the highest level since early August. Yields on 2-year notes (UST2YR 0.89, -0.01, -1.33%) declined 2 basis points to 0.89%, falling from the lowest level since early November. Consumer spending rose 0.5% in November, compared to economists' expectations for a 0.7% increase. Personal income also rose less than anticipated. The Commerce Department report contained a measure of inflation excluding fuel and food that is the Federal Reserve's preferred gauge of inflation. The core personal-consumption-expenditures index was unchanged from October, up 1.4% in the last year. "The data was softer than expected with downward implications for growth and little inflation pressure, bond-bullish and the market is trading it that way," said strategists at CRT Capital Group. Still to come at 10 a.m. Eastern time are reports on new-home sales and an update on consumer sentiment from Reuters/University of Michigan. Bond yields jumped on Tuesday after a bigger-than-predicted jump in new-home sales. Also, the Treasury Department will announce how much in debt it will auction next week. "There is no doubt that the increasingly loud footsteps of new Treasury supply were partly behind the spike higher in Treasury rates seen in the past few days," said strategists at RBS Securities. The government will sell $44 billion in 2-year notes on Monday, $42 billion in 5-year notes (UST5YR 2.44, -0.02, -0.77%) on Tuesday and $32 billion in 7-year debt on Wednesday, according to Wrightson ICAP. The amounts would be the same as last month's sales, but will come in a holiday-shortened week and when many firms have reduced trading activity into the end of the year.

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