The Fed also refrained from providing stronger signals of prolonged stimulus in a statement after its Oct. 29-30 meeting, signaling diminishing concern over higher borrowing costs as they maintained the pace of bond purchases and sought more evidence of sustained growth.

Yields on the 10-year notes rose 0.11 percentage point to 2.62 percent last week, Bloomberg Bond Trader prices show. The yield on the benchmark security dropped three basis points to 2.59 percent at 8:39 a.m. in New York.

At the start of the year, Frankfurt-based Deutsche Bank predicted in a Bloomberg survey of 75 forecasters on Jan. 4-9 that yields would eclipse 2.5 percent by the third quarter as a strengthening economy bolsters speculation the Fed would start paring stimulus.

Taper Talk

The average estimate called for yields on the 10-year notes to reach 2.09 percent, from 1.9 percent when the survey was published. Yields started to climb from a low of 1.63 percent in May, prompting Gross, co-chief investment officer at Newport Beach, California-based Pimco to say on May 10 that the bull market in bonds probably ended.

Fed Chairman Ben S. Bernanke said later that month that policy makers could taper their bond buying in “the next few meetings” if the U.S. showed sustained growth.

By Sept. 30, 10-year yields had soared to 2.61 percent, rising almost a percentage point from the end of May in the biggest surge since the first four months of 2009 and putting Treasuries on course for their first annual loss in four years.

Konstam’s year-end forecast of 2.25 percent is now lower than 64 of 65 estimates in a Bloomberg survey and more than a half-percentage point below the average 2.79 percent projection.

Economists predict the Fed will maintain the current pace of purchases until March, a Bloomberg survey on Oct. 17-18 showed. They cut their forecast for fourth-quarter growth to 2 percent, according to the median estimate in a Oct. 31 survey, from 2.4 percent prior to the shutdown.

“The uncertainty generated by that shutdown is likely to be enough to keep the Fed’s position on tapering on hold for longer,” Jake Lowery, a money manager at ING U.S. Investment Management, which oversees $120 billion of fixed-income assets, said in an Oct. 29 telephone interview from Atlanta.