Treasuries Fall on Bets Central Banks Will Act to Spur Growth

Treasuries fell for a third day amid speculation major central banks from the Federal Reserve to the Bank of Japan will boost measures to revive the global economy.

Two-year notes headed for a weekly decline after European Central Bank President Mario Draghi said yesterday officials will do whatever is necessary to preserve the euro, boosting demand for higher-yielding assets. The decline in Treasuries was tempered before a U.S. report forecast to show economic growth slowed in the second quarter.

The benchmark 10-year yield rose two basis points, or 0.02 percentage point, to 1.46 percent at 8:19 a.m. London time, according to Bloomberg Bond Trader prices. The 1.75 percent note maturing in May 2022 fell 5/32, or $1.56 per $1,000 face amount, to 102 21/32.

Two-year yields were little changed at 0.23 percent, having increased three basis points this week.

U.S. government securities have returned 1.4 percent this month as of yesterday, according to indexes compiled by Bank of America Merrill Lynch.

“Within our mandate, the ECB is ready to do whatever it takes to preserve the euro,” Draghi said in a speech in London. “And believe me, it will be enough.”

U.S. gross domestic product rose at a 1.4 percent annual rate after a 1.9 percent gain in the prior quarter, according to economists surveyed by Bloomberg News. Consumer purchases, which account for about 70 percent of the world’s largest economy, may have grown at the weakest pace in a year.

To contact the reporter on this story: Lukanyo Mnyanda in Edinburgh at lmnyanda@bloomberg.net

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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