notes 10-year Treasury went to the longest streak of weekly losses in 19 months

notes 10-year Treasury went to the longest streak of weekly losses in 19 months before a report that economists said showed consumer spending gained last month, fueling speculation the central bank will reduce purchases assets.

Five-year notes fell for a second day amid concern printing money by the Federal Reserve fuel inflation and sap demand for fixed income assets as the economy recovers. The Fed has to slow or stop its quantitative easing program called in response to an acceleration in the economy next year, the Philadelphia Fed Charles Plosser, the president said yesterday. The yields indicate traders added to bets inflation will accelerate in the economic outlook improves.

"Economic data have been much better than expected, pointing to the fact that the bond bull market is behind us," said Matteo Regesta, fixed income strategist at BNP Paribas SA in London. "The landscape is one of the highest yields of here."

The benchmark yield rose to 10 basis point to 3.36 percent as of 6:43 am in New York, according to BGCantor Market Data. The price of 2,625 per cent security due in November 2020 fell 1 / 32 or 31 cents per $ 1,000 face amount to 93 28/32. The two-year yield is little changed at 0.64 percent, while 1,375 percent security maturing in 2015 rose one basis point to 2.02 percent.

Government interest

ten-year yields have climbed almost half a percentage point in the last four weeks and are set for the longest run of increases since May 2009, when rates of completing a seven-week gain in the government's concern borrowing would exceed demand .

Treasury bonds gave investors a loss of 2.1 percent this month, according to Bank of America Merrill Lynch indexes. The last time the U.S. sovereign debt fell more than a month was in December 2009, when it fell 2.6 percent.

Spending by U.S. consumers, representing about 70 percent of the economy, rose 0.5 percent after rising 0.4 percent in October. Bed Bath & Beyond Inc., the retailer of the Union, home products based in New Jersey, yesterday raised its profit forecast.

A separate report may show stocks of durable goods, excluding cars and aircraft, rose 1.8 percent.

The difference between the rates of 10-year bonds and Treasury inflation-protected securities, an indicator of expectations operator in consumer prices during the life of the securities, was 2.31 percentage points today, from this year low 1.47 percentage points in August. The average of the last five years is 2.09 percentage points.

The reaction of the Fed

"If the rate of growth of the economy continues to strengthen and is sustainable, then I'll be looking for the Fed to react to that," Plosser said in an interview yesterday "The advantage of Hays," with Kathleen Hays . "That may be to reduce the amount of accommodation in a gradual manner. One way would be to begin to stop some of the purchases or slow."

The Fed plans to add 600 billion U.S. dollars to the economy by buying Treasury bonds, while President Barack Obama agreed to extend the tax cuts to stimulate growth.

The Treasury is expected to announce today the sizes of the two auctions five to seven years scheduled for next week.

Probably going to sell 99 billion U.S. dollars of notes, unchanged from November auctions of the securities.

December advance in U.S. yields reflecting expectations of economic growth, said Peter Jolly, head of Sydney-based market research for investment banking unit of National Australia Bank Ltd., the biggest lender in the nation. Inflation has remained under control, and that will support bonds, he said.

Preferred Price

"The U.S. economy, but is recovering, inflation has very little," said Jolly. "Yields have risen far enough. There is some history of the recovery in yields."

Today's report also shows spending measure the Fed's preferred price, which excludes food and fuel, rose 0.9 percent from a year earlier, according to economists. The figure corresponds October, which was the lowest since records began in 1960.

ten-year rates will be reduced to 3.3 percent by March 31 and then move to 4 percent in late 2011, said Jolly.

A survey of banks and securities companies projects yield will rise to 3.53 at the end of next year, with the most recent forecasts given the highest weighting. Investors who bought today would earn 2 percent, reflecting both lower prices and interest payments.

Client Retreat

Bond mutual funds had the largest customer of the recall of more than two years last week.

the U.S. bond funds experienced the withdrawal of 8.62 billion U.S. dollars in the seven days ended Dec. 15, compared with $ 1,660,000,000 the week before, according to the Investment Company Institute, a trade group based in Washington.

Financial markets are closed today in Japan for a holiday. The negotiation of the Treasury is scheduled to stop at 2 pm in New York and stay closed tomorrow in the world for Christmas, according to the Securities Industry and Financial Markets Association website.

Trading in the UK will be closed December 27 and December 28 in observance of Christmas and Boxing Day, the association said.