Treasuries Fall on Economic-Growth Bets; Inflation Gauge Climbs

(Bloomberg) -- Treasuries declined, paring some of Monday’s gains, as traders refocused on the prospect of faster economic growth. A market measure of inflation expectations jumped the most in about three weeks.

The benchmark 10-year U.S. yield rose three basis points to 2.56 percent at 3:58 p.m. in New York, according to Bloomberg Bond Trader data. It fell five basis points Monday, the most in two weeks, on a flight to quality after an attack on a Berlin Christmas market and the killing of Russia’s envoy to Turkey. Treasuries pared losses as oil prices retreated from the day’s highs after Libya’s National Oil Corp. said it reopened the Sharara and El Feel oil fields.

• The 10-year break-even rate, which reflects investor expectations for average annual inflation over the next decade, climbs the most since Nov. 30
• Bonds across much of Europe also decline; 10-year yields rise from one to five basis points
• U.S. yield curve from five to 30 years steepens, reversing earlier flattening
• By around 3 p.m. in New York, two- and five-year futures were running at about 60 percent of their average 30-day volume; 10- and 30-year were around 75 percent as activity remained muted
• In U.S. economic data, this week sees existing home sales, gross domestic product, personal consumption, durable goods orders, new home sales and University of Michigan sentiment
• U.S. to auction five-year Treasury Inflation Protected Securities on Dec. 22

To contact the reporters on this story: Brian Chappatta in New York at bchappatta1@bloomberg.net, Edward Bolingbroke in New York at ebolingbrok1@bloomberg.net. To contact the editors responsible for this story: Boris Korby at bkorby1@bloomberg.net, Mark Tannenbaum