Treasuries rose a second straight day as U.S. durable goods orders unexpectedly fell last month and home sales dropped, adding to concern that the economy is in a recession. Government debt rallied even as the Treasury prepares to sell $28 billion in two-year notes today, the most since 1972.
Purchases of new homes slowed to a 590,000 annual pace last month, the lowest level in 13 years, from 601,000 in January, according to the Commerce Department. Wall Street banks, brokerages and hedge funds may report $460 billion in credit losses from the collapse of the subprime- mortgage market, or almost four times the amount already disclosed.
Appetite may wane at the two-year note auction today amid a decrease in bets for Fed rate cuts. Traders see a 40 percent chance the Fed will cut its target rate a half percentage-point to 1.75 percent at its next meeting on April 30, compared with 82 percent a week ago, according to futures contracts on the Chicago Board of Trade. The rest of the bets are on a quarter- point reduction.
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