Treasuries snapped a five-day rally, the longest since January, on speculation tumbling yields will erode demand when the government sells $21 billion of 10- year debt today.

The extra yield 10-year notes offer over two-year securities was as little as 1.67 percentage points yesterday, the least in a month. Treasuries rallied yesterday on speculation the European sovereign-debt crisis is worsening as rates on Spanish and Italian bonds rose.

U.S. notes due in 2022 yielded 2 percent as of 10:08 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 2 percent security maturing in February of that year changed hands at 100 1/32. The rate slid to 1.96 percent yesterday, a level not seen for five weeks.

“I don’t want 10-year notes at yields below 2 percent,” said Tsutomu Komiya, who helps oversee the equivalent of $111 billion as an investor in Tokyo at Daiwa Asset Management Co., a unit ofJapan’s second-biggest brokerage. “They’re expensive.”

Ten-year notes yielded negative 90 basis points, or 0.90 percentage point, after accounting for consumer prices.

The difference between Spanish and German 10-year rates widened to 4.33 percentage points yesterday, the most since November, after the April 9 announcement by Spain’s Prime MinisterMariano Rajoy that he would cut an additional 10 billion-euros ($13 billion) in education and health spending failed to ease concern that the nation will become the fourth euro member to need a bailout.

The U.S. sold $32 billion of three-year notes yesterday, with the class of bidders that includes foreign central banks taking 40 percent of the debt, the largest share since August.

It was a “risk-off day,” said William O’Donnell, head U.S. government bond strategist at Royal Bank of Scotland Group Plc’s RBS Securities in Stamford, Connecticut, one of the primary dealers required to bid at the auctions. “We think it’s going to continue. The return of European stress has legs.”

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)