Two Year Treasury Notes Yield .58%

Treasury two-year note yields were near a record low on speculation employment reports will add to evidence that the U.S. economic recovery is too fragile for the Federal Reserve to raise interest rates. The difference in yield, or spread, between two- and 10- year Treasury notes narrowed as investors reduced their inflation expectations. The possibility of deflation and a recession in the U.S. is 25 percent, according to Mohamed A. El- Erian, chief executive officer at Pacific Investment Management Co. The Fed’s next policy decision is scheduled for Aug. 10. “Markets are once again more fearful about the economic outlook,” said Glenn Marci, a fixed-income strategist in Frankfurt at DZ Bank AG, Germany’s biggest cooperative lender. “Investors are not confident enough to believe we’ll see a sustained recovery and are looking more at the double-dip scenario.” The two-year note yielded 0.58 percent as of 10:04 a.m. in London, after falling to a record low of 0.5143 percent on Aug. 3. The 0.625 percent note due July 2012 traded at 100 3/32, according to BGCantor Market Data. Ten-year yields were little changed at 2.96 percent. Read more here:

Two Year Treasury Notes Yield .58%