Feb. 1 (Bloomberg) -- Treasuries fell, with 30-year bonds extending their longest run of monthly losses since 1999, as economists said an industry report today will show U.S. manufacturing is growing. Thirty-year securities have declined for five months, pushing the extra yield they offer over two-year rates to a record, as investors demanded compensation on their long- maturity holdings for the prospect of accelerating inflation and on speculation the country may struggle to fund its budget deficit. Asian stocks advanced, curtailing demand for the relative safety of government debt. "Overall the economic data has been pretty good, and this has been an important factor" for Treasuries, said Karsten Linowsky, a strategist at Credit Suisse Group AG in Zurich. "The debt outlook is still for the U.S. to have large deficits. This will be priced in, especially in the long end." Thirty-year yields increased two basis points to 4.59 percent at 7:52 a.m. in London, according to BGCantor Market Data. The price of the 4.25 percent bond maturing in November 2040 declined 11/32, or $3.44 per $1,000 face amount, to 94 14/32. The 2- to 30-year spread was 4.02 percentage points, versus the record of 4.04 percentage points set Jan. 28. Thirty-year yields rose to 4.64 percent that day, the most since April 29. Ten-year yields climbed four basis points today to 3.41 percent. So-called long bonds handed investors a 3.3 percent loss in January, according to indexes compiled by Bank of America Merrill Lynch. The broader market was little changed. Five-Month Slide Bonds' five-month decline has totaled 15 percent. The last time they slid for so long was a seven-month slide in 1999, when the Federal Reserve was switching to raising interest rates from cutting them. Thirty-year yields will advance to 4.80 percent and 10-year rates will climb to 3.74 percent by year-end, according to a Bloomberg survey of banks and securities companies with the most recent forecasts given the heaviest weightings. The Institute for Supply Management's factory index was little changed at 58 last month, compared with the eight-month high of 58.5 in December, according to a Bloomberg News survey. Readings above 50 signal growth. Caterpillar Inc., the world's largest maker of construction equipment, reported results on Jan. 27 that topped analysts' estimates. Inflation Bonds The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the securities, has widened to 2.33 percentage points from 2010's low of 1.47 percentage points in August. The five-year average is 2.09 percentage points. Crude-oil futures rose to a 27-month high yesterday. Bond bulls say inflation isn't showing up in the data. The Fed's preferred price index, which is tied to spending patterns and excludes food and fuel, increased 0.7 percent in December from a year earlier, a government report showed yesterday. The figure is the least on record, based on Commerce Department data. The central bank plans to pump $600 billion into the economy by June 30 by purchasing Treasuries to counter the downward trend in inflation. It is scheduled to snap up $1 billion to $2 billion of inflation-protected debt due from April 2013 to February 2040 today as part of the program, according to its website. 'Won't Increase' "Inflation won't increase much," said Takuya Yamamoto, who helps oversee the equivalent of $116.2 billion as a portfolio manager in Tokyo at Diam Co., a unit of Dai-Ichi Life Insurance Co., Japan's second-largest life insurer. "Demand from the Fed" will support the market, he said. Diam bought Treasuries in December, Yamamoto said. Treasuries fell yesterday as U.S. consumer spending rose in December by more than economists forecast and as concern eased that protests in Egypt would disrupt global trade. Yields suggest Egypt concerns are contained, Jim Caron, global head of interest-rate strategy at Morgan Stanley in New York, wrote in a report yesterday. The overnight London interbank offered rate for dollars, which banks charge on loans to each other, has declined to 23.5 basis points from 25.2 basis points on Dec. 31. "The unrest in Egypt is thus far not creating systemic contagion in the U.S. markets," wrote Caron, whose company is one of the 18 primary dealers that are authorize to trade directly with the Fed. Bonds also declined today as the MSCI Asia Pacific Index of shares rose 0.4 percent, snapping a two-day loss.

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