The gap between yields on 10- and 30-year Treasuries narrowed for a second week after the Federal Reserve extended its Operation Twist program to replace short- term notes in its holdings with longer-term debt to spur growth.
US government securities fell amid speculation European leaders will make progress on curbing their sovereign-debt crisis. The European Central Bank loosened collateral rules to ease access to its funds, and leaders of Germany, France, Italy and Spain agreed to cooperate on a growth plan for the euro bloc. The Treasury will auction $99 billion of notes next week.
“The extension of Operation Twist and further buying on the long end is a recipe for a flatter curve,” said Larry Milstein, managing director in New York of government and agency debt trading at R W Pressprich & Co, a fixed-income broker and dealer for institutional investors.
