Treasuries Drop on Reduced Foreign Central Bank Bid at Auction

Treasuries fell after the sale of $32 billion of three-year debt, the first of three U.S. securities sales, drew the lowest demand in the category of bidders that includes foreign central banks since May 2007.

Ten-year note yields rose to the most since April before Treasury sells $24 billion in 10-year notes tomorrow and $16 billion in 30-year bonds the following day. An unexpected drop in U.S. unemployment Feb. 4 and measure of small business confidence rose, adding to evidence the economy is accelerating. Federal Reserve Chairman Ben S. Bernanke testifies tomorrow before the House Budget Committee amid speculation about how the central bank will pull back from its debt-buying to bolster the U.S. economy.