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Treasuries fell as Federal Reserve Chairman Ben S. Bernanke defended the central bank’s unprecedented asset purchases during congressional testimony, fueling demand for riskier assets.
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Treasuries were little changed before the government sells $32 billion of three-year notes, the first of three auctions of coupon-bearing debt this week totaling $72 billion.
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Treasury 10-year yields touched 2 percent for the first time since April after U.S. durable-goods orders climbed more than forecast. The Standard & Poor’s 500 Index retreated following an eight-day rally, its longest since 2004. The yen strengthened and the pound weakened.
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Treasury 10-year note yields touched 2 percent for the first time since April as orders for durable goods in the U.S. rose more than forecast, another signal the U.S. economic recovery may be strengthening.
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Treasury 10-year notes rose for a second week for the first time since November as the absence of progress toward resolving the impasse on raising the U.S. debt ceiling sustained demand for the safest securities.
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China, the largest foreign lender to the U.S., reduced its holdings of Treasuries in November for a second month as yields on the debt approached lows of the year and total foreign demand accelerated.
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Treasuries rose for a third day amid speculation U.S. lawmakers will struggle to reach agreement in time to avoid the so-called fiscal cliff of more than $600 billion in automatic spending cuts and tax increases.
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Treasury three-year notes are trading at almost the the most expensive levels in more than seven months compared with two- and five-year debt, as the U.S. prepares to sell $32 billion of the securities.
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The Federal Reserve has been accelerating purchases of more newly issued Treasuries as part of its maturity-extension program while primary dealers’ willingness to offer securities to the central bank ebbs.
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Treasuries fell for a third day, the longest losing streak in almost six weeks, as a surge in new- home construction to the highest level in four years reduced demand for the safety of U.S. government debt.