Treasuries rose & pushing yields to 10 years less than the highest level in seven months

Treasuries rose, pushing yields to 10 years less than the highest level in seven months, a government report showed that consumer prices advanced in November than economists expected.

The extra yield investors demand to hold a 10-year 2-year debt fell for the first time in four days as Moody's Investors Service said it may cut the credit rating of Spain. U.S. debt fell yesterday after the Federal Reserve said that economic recovery continues and maintained its program of 600 billion U.S. dollars for purchases of debt.

"The rise in yields is ahead of itself," said Dan Greenhaus, chief economic strategist at Miller Tabak & Co. in New York. "The Fed is still suspended, and inflation as evidenced by today's report is relatively benign."

The yield on the benchmark 10-year fell six basis points, or 0.06 percentage point to 3.41 percent at 9:25 am in New York, according to BGCantor Market Data. The price of the security of 2,625 percent due November 2020 rose 15/32, or $ 4.69 per $ 1,000 face amount, to 93 13/32. Past performance rose to 3.50 percent, the highest since May 14.

MOVE rate of Bank of America Merrill Lynch, which measures the oscillations of the Treasury based on prices of put options maturing in 2-30 years, rose yesterday to 118.40, the highest since October 2009 .

Consumer prices increased 0.1 percent in November, the Labor Department reported today in Washington. The median forecast of 80 economists surveyed by us was for an advance of 0.2 percent.

"There is no serious sign '

"There is no serious sign of inflation pressure," said Andy Cossor, Hong Kong, chief market strategist for Asia at the DZ Bank AG, Germany's fifth largest lender, before the inflation report was released .

China remained the largest foreign holder of U.S. Treasury bonds, after its holdings increased by 23.3 billion U.S. dollars to 906.8 billion U.S. dollars in October, the U.S. Treasury reported. Japan, the second largest operator, increased its holdings by $ 12,800,000,000 to $ 877,400,000,000 in October.

Treasuries rose earlier after Moody's Investors Service said it put the credit rating of Spain on the review and auction € 500 million (666 million U.S. dollars) from Portugal bills three months drew less demand.

Portuguese stock sale attracted bids due March equivalent to 1.9 times the amount offered, compared with a ratio of 2.2 in November, government figures showed. Tickets were sold at an average yield of 3.403 percent, up from 1.818 percent the previous offer.

Tax Reduction Deal

Treasury bonds fell in early speculation about the U.S. agreement President Barack Obama to extend the tax cuts will in Congress to support growth, raise inflation and prompted investors to reduce holdings of longer-term.

Fed officials maintained yesterday its plan to buy Treasuries through June, under the quantitative easing, disappointing some investors by not extending the stimulus record.

The central bank remained committed to keep its benchmark rate low for an extended period will, keeping the target rate for overnight bank loans a day zero to 0.25 percent, where it has been since December 2008.

Yields of 10-year bonds may fall back toward 3 percent, technical indicators show the debt has been oversold, according to Canadian Imperial Bank of Commerce.

When the yield increased to 3.49 percent yesterday, to cross the 61.8 percent decline from a peak of 4 percent in April and a low of 2.33 percent on Oct. 8, on the basis of a series of numbers known as the Fibonacci sequence.

"Yields may fall to 3 percent by year-end, possibly before returning to test the level of 61.8 percent back to form a double top," said Kazuaki Oh'e, Executive Director based in Tokyo fixed income, currencies and its distribution in Canada's fifth-largest lender.