Bonds globally outperformed stocks, which reached record highs in 2013. Fixed-income assets returned 1.57 percent in January, the best start to a year since at least 1997, according to Bank of America Merrill Lynch index data. The MSCI All- Country World Index of stocks lost 4 percent.

Treasuries are also benefiting from a shrinking budget deficit after borrowing by the Obama administration to help pull the U.S. out of a recession led to shortfalls that exceeded $1 trillion for four straight years.

The government will sell $717 billion of notes and bonds on a net basis, 14 percent less than last year and the least since 2008, according to a survey last month of primary dealers which are obligated to bid at Treasury auctions. Higher corporate and individual tax receipts led the dealers to predict the budget deficit will decline to $629 billion, the least since 2008.

Slow Grind

A potential fiscal showdown in Congress as lawmakers approach a deadline this week to increase the limit for the U.S. borrowing capacity may also temper any rise in Treasury yields.

There are “exogenous events and hiccups that could continue, as in the debt ceiling,” Sean Simko, a money manager who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania, said in a Jan. 27 telephone interview. “Investors remember what we just went through and uncertainty creates nervousness in the marketplace. It won’t be a sharp and swift move higher -- it will be a slow and gradual move” in yields.

Congress stoked market panic in 2011 and 2013 by delaying an agreement that fueled concern the U.S. could default. Standard & Poor’s in 2011 stripped the U.S. of its top rating for the first time in 70 years amid congressional battles.

“We were a buyer at 3 percent -- anything north of 3 percent is slightly long for us at this point,” James Camp, a money manager who oversees $5.5 billion in fixed-income assets at Eagle Asset Management in St. Petersburg, Florida, said in a Jan. 28 phone interview. “The Treasury market as a safe haven - - that bid is certainly back and then some as we begin 2014. There’s a place for the most liquid asset class in the world.”

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