The Treasury market has benefited from being one of the only refuges left for investors even as the amount of U.S. government borrowing surpassed $15 trillion. The yen is the only major currency to have outperformed the dollar, rising 4.1 percent.

"You have a lot of risk-free, high-quality assets globally that are no longer risk-free, in terms of the other global sovereigns," Christopher Bury, co-head of fixed-income rates at Jefferies & Co., a primary dealer, said in a Dec. 16 telephone interview. "You have more people chasing fewer risk-free assets. Everything points right now in the same direction."

Rolling Returns

U.S. government debt will post its best five-year performance, gaining 39 percent from the start of 2007, since they returned 45 percent from 1998 through 2002, a period that included the failure of Long-Term Capital Management LP, the collapse in internet stocks and the Sept. 11 terror attacks.

That's even as budget deficits have totaled $4 trillion in the three fiscal years from October 2008 through September 2011. The shortfall may narrow to $1.1 trillion in fiscal 2012 from $1.3 trillion in 2011, according to a survey of bond dealers in the minutes of the Treasury Borrowing Advisory Committee's Nov. 2 meeting.

The Obama administration will ask Congress to increase federal borrowing authority by $1.2 trillion as the nation approaches the debt limit set by law, according to a Treasury Department official. The White House will send the request to Congress on Dec. 30, the day the debt is projected to rise to within $100 billion of the $15.194 trillion limit, the Treasury official told reporters today on condition of anonymity.

About 45 percent of the $7.76 trillion in Treasury notes and bonds will need to be refinanced by the end of 2014, highlighting the importance of continued demand.

"I'm not as concerned" about the ability of the Treasury to attract borrowers "as I am about the economy being self- sustaining," David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors, said in a Dec. 21 telephone interview.

Economic Outlook

The economy will probably expand 2.1 percent in 2012 and 2.5 percent in 2013, according to median forecasts in a Bloomberg News survey. The Fed's forecast is for 2.7 percent growth in 2012 and 3.25 percent in 2013.

In addition to keeping its benchmark rate at a record low, policy makers moved on Sept. 21 to contain yields, saying the central bank would buy $400 billion of longer-term government securities and sell $400 billion of short-term debt.