Treasury yields were at the highest level in almost two weeks before an industry report economists forecast will show service industries in the U.S. expanded in March, adding to signs the economic recovery is widening.

Government securities slid yesterday after minutes from the Federal Reserve’s last meeting showed policy makers are holding off increasing monetary stimulus unless growth falters. The Institute for Supply Management’s non-manufacturing index was probably 56.8 from 57.3 in February, according to the median estimate in a Bloomberg News survey of 68 economists. The figure would match January’s as the second-strongest level in a year. Readings greater than 50 indicate growth.

“There is a risk that Treasury yields will rise because the economy is improving,” said Tsutomu Komiya, who helps oversee the equivalent of $111 billion as an investor in Tokyo at Daiwa Asset Management Co., a unit of Japan’s second-biggest brokerage. “It doesn’t require additional monetary easing.”

Ten-year notes yielded 2.30 percent as of 9:57 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent note due in February 2022 changed hands at 97 10/32. The yield matched the highest level reached yesterday, which was the most since March 22.

No QE3?

Treasuries fell yesterday as the minutes from the March 13 Fed meeting dashed speculation policy makers would hint at more asset purchases.

The central bank bought $2.3 trillion of securities to spur the economy in two rounds of quantitative easing, known as QE1 and QE2, from December 2008 to June 2011.

“The market was looking for QE3,” said William Larkin, a fixed-income money manager who helps oversee $500 million at Cabot Money Management Inc. in Salem, Massachusetts. “They are saying that the recovery is on track.”

Fed Bank of Atlanta President Dennis Lockhart said he sees no need for further easing. Lockhart spoke yesterday on Bloomberg Radio’s “Hays Advantage” with Kathleen Hays.

“The economy is in a situation where it can be interpreted as half full or half empty,” Lockhart said. “I’m not concerned about a double-dip reaction. We have an economy that’s growing at a moderate pace and is getting more traction.”

The Fed on March 13 reiterated its statement that economic conditions would probably warrant “exceptionally low” interest rates at least through late 2014. It has held its target rate to a range of zero to 0.25 percent since December 2008.

To contact the reporter on this story: Wes Goodman in Singapore atwgoodman@bloomberg.net

To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

• Asian Stocks Rise on Faster Japan Inflation, U.S. Outlook   (2014-05-30 09:33:27)
• Asian Stocks Rise on Faster Japan Inflation, U.S. Outlook   (2014-05-30 09:33:27)
• Asian Stocks Rise on Faster Japan Inflation, U.S. Outlook   (2014-05-30 09:33:02)
• Asian Stocks Fluctuate After Japan Retail Sales Slump   (2014-05-29 09:37:51)
• Asian Stocks Fall Second Day as Health-Care Shares Drop   (2014-04-08 08:52:58)
• Industrial Stocks Take ETF Bounty   (2014-04-08 08:52:29)
• Asian Stocks Set for Second Weekly Gain Before U.S. Jobs   (2014-04-04 09:46:16)
• Australia Model Curbs Speed as CEO Says U.S. Too Far Gone   (2014-04-04 09:45:49)
• Asia Stocks Rise 4th Day as Consumer Shares Lead Gain   (2014-03-31 10:48:33)
• Asia Stocks Swing After U.S. Manufacturing Index Falls   (2014-03-25 11:29:14)