By Theresa Barraclough and Paul Dobson Jan. 21 (Bloomberg) -- Treasuries fell after a Chinese government report showed the nation’s economic growth accelerated to the fastest since 2007 last quarter, damping demand for the safety of government debt. Ten-year yields climbed from near the lowest level in a month after China said gross domestic product rose 10.7 percent from a year earlier, faster than the median forecast of 10.5 percent in a Bloomberg News survey. The World Bank raised its forecast for global growth in 2010. Demand for Treasuries also waned as the U.S. prepared to announce today the amount of two-, five- and seven-year notes it will sell next week. “The China numbers help to provide good sentiment for the economy and it’s weighing on government bonds,” said Karsten Linowsky, a fixed-income strategist at Credit Suisse AG in Zurich. “The positive numbers improve the risk-taking outlook.” The yield on the benchmark 10-year note rose 1 basis point to 3.66 percent as of 8:15 a.m. in London, according to BGCantor Market data. It fell as low as 3.63 percent yesterday, the least since Dec. 21. The 3.375 percent security due November 2019 declined 3/32, or 93 cents per $1,000 face amount, to 97 20/32. China’s government also said today consumer prices rose a greater-than-forecast 1.9 percent in December from a year earlier, the second straight gain. Producer prices climbed 1.7 percent, after declining 2.1 percent the prior month. World Bank The World Bank said the global economy will expand 2.7 percent this year, compared with an estimate in June of a 2 percent expansion. It also warned that the recovery may lose momentum in the second half of the year as government stimulus programs wind down and “high” unemployment persists. U.S. data may also point to economic expansion today. An index of leading indicators rose in December for a ninth month, economists said before a report today. The Conference Board’s gauge of the economic outlook climbed 0.7 percent, according to a Bloomberg survey. Other reports today may show fewer Americans filed for jobless benefits and Philadelphia-area manufacturing expanded. The U.S. will auction two-year notes on Jan. 26, five-year debt the following day and seven-year securities on Jan. 28. The package will total $118 billion, according to Wrightson ICAP LLC, an economic advisory firm in Jersey City, New Jersey. Rising government borrowing and record low Federal Reserve interest rates will push Treasury yields higher this year, said Roger Bridges, who oversees about $10.9 billion of debt in Sydney at Tyndall Investment Management Ltd., part of Australia’s third-largest insurer. ‘Asset-Price Inflation’ “The fiscal-policy outlook isn’t that good,” Bridges said. “If the Fed tightens too slowly, we may see asset-price inflation. I don’t think there’s enough premium in Treasuries for the risks.” Fed policy makers, who start a two-day meeting on Jan. 26, last month repeated a pledge to keep borrowing costs “exceptionally low” for an “extended period.” The central bank cut its target rate to a range of zero to 0.25 percent in December 2008. Tyndall cut its Treasury holdings at the end of last year, Bridges said. Ten-year yields will rise to at least 4 percent in 2010, he said. The decline in Treasuries was tempered on speculation U.S. bank earnings to be released today, including those of Goldman Sachs Group Inc., will fall short of analysts’ estimates. The Standard & Poor’s 500 Index fell 1.1 percent yesterday amid concern the fourth-quarter earnings season will fall short of analysts’ forecasts for a 67 percent increase in profits. Yields in ‘Downtrend’ IBM Corp. reported yesterday a decrease in fourth-quarter business-consulting revenue, and Morgan Stanley, the world’s biggest brokerage, posted earnings that missed analysts’ estimates. Companies reporting today include Goldman, American Express Co. and Google Inc. “Treasury yields are in a downtrend,” said Yasutoshi Nagai, chief economist in Tokyo at Daiwa Securities SMBC Co., part of Japan’s second-largest brokerage. “Compared to the stock market, the bond market is a better place to be. We cannot expect good earnings in the current environment.” Ten-year yields will decline to 3.30 percent by the end of March, Daiwa’s Nagai said. Should his predictions prove accurate, investors who buy the debt today would make a 3.8 percent return, Bloomberg calculations show. Treasuries have handed investors a gain 1.2 percent so far this month, rebounding from December’s 2.6 percent loss, indexes compiled by Bank of America Corp.’s Merrill Lynch unit show. To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.netPaul Dobson in London at pdobson2@bloomberg.net

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