Treasuries fell, helping push an index of global bonds lower this month, on speculation U.S. reports this week will show durable-goods orders and economic growth increased. Thirty-year bond yields approached an eight-month high as analysts said the world may be entering an expansion that will lift all economies. The U.S. plans to sell $99 billion of notes over three days this week as the Federal Reserve meets and President Barack Obama gives his State of the Union speech. “Yields will rise a bit more” in the Treasury market, said Kei Katayama, who helps oversee the equivalent of $55.1 billion as leader of the foreign fixed-income group at Daiwa SB Investments Ltd. in Tokyo, part of Japan’s second-biggest brokerage. “The U.S. will have steady growth.” Katayama said he holds fewer Treasuries than the percentage in the benchmark he uses to gauge performance. U.S. 10-year rates climbed three basis points to 3.44 percent as of 1:41 p.m. in Tokyo, according to BGCantor Market Data. The 2.625 percent security maturing in November 2020 slid 1/4, or $2.50 per $1,000 face amount, to 93 9/32. A basis point is 0.01 percentage point. Thirty-year yields rose two basis points to 4.59 percent. They increased to 4.63 percent on Jan. 20, which was the highest level since April 29. The difference between two- and 30-year rates widened to a record 4.01 percentage points on Jan. 20. Debt Sales This week’s auctions will consist of $35 billion in two- year notes tomorrow, the same amount of five-year debt the following day and $29 billion in seven-year notes Jan. 27. Orders for durable goods climbed 1.5 percent in December, the first gain in three months, economists forecast before the Commerce Department reports the number on Jan. 27. Separate figures from the department on Jan. 28 will show gross domestic product quickened and consumer spending rose the most in four years, based on Bloomberg News surveys. Apple Inc. said on Jan. 18 that it had record quarterly sales, helped by holiday buying of its iPads, iPhones and Macintosh computers. Treasuries have handed investors a 0.3 percent loss in January, according to bank of America Merrill Lynch indexes. Global bonds have fallen 0.4 percent, heading for a fifth monthly loss. They have dropped 2.2 percent since the end of August, while the MSCI All Country World Index of stocks returned 21 percent. Fund managers in a weekly survey by Ried Thunberg ICAP Inc. became less bearish on the outlook for Treasuries through March. Ried’s sentiment index rose to 48 for the seven days ended Jan. 21 from 46 the week before. A figure less than 50 indicates investors expect prices to fall. Global Growth Worldwide gross domestic product will swell to $143 trillion by 2030, allowing for inflation and market-exchange rates, from $62 trillion in 2010, estimates Gerard Lyons, chief economist and group head of global research in London for Standard Chartered Bank, which generates most of its earnings from Asia. Lyons and his colleagues predict a “super-cycle” of growth. He’s betting the new phase will contribute to a reversal in the three-decade decline for U.S. bond yields after 10-year Treasury notes lost an average 40 basis points a year since the early 1980s. The Federal Reserve plans to purchase $7 billion to $9 billion of Treasuries due from July 2016 to December 2017 today as part of its plan to spur the economy, according to its website. Central bank policy makers are scheduled to hold their next meeting tomorrow and the following day. Obama’s speech is also set for tomorrow. Inflation Protection There has been no better place in the U.S. government bond market since 2008 than in debt that protects against faster inflation. Now, traders now say the securities may be poised to fall as consumer prices rise too slowly to justify the gains. Treasury Inflation-Protected Securities returned 17 percent the last two years, compared with gains of 1.9 percent in Treasuries, Bank of America Merrill Lynch indexes show. Yields on 10-year TIPS show bondholders expect the consumer price index to increase 2.20 percentage points a year on average over the life of the debt. The rate rose 1.5 percent in 2010 and is forecast to climb 1.7 percent this year, based on a Bloomberg survey of more than 60 economists. The mismatch in expectations may suggest the portion of the U.S. government bond market established in 1997 as a buffer against inflation may be losing some of its predictive power. “We’re nowhere near any inflationary type of levels,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s private wealth unit in New York. “There’s a lot of slack in the U.S. economy, especially in the labor market. It’s too soon to get too bullish on TIPS.” To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net. To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net.

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