Investors say it’s not time to abandon Treasuries, because the securities may be cheap relative to inflation. Yields on 10- year notes are about 0.79 percentage point higher than the personal consumption expenditure price index, the Fed’s favored inflation gauge. Earlier this month it reached the most since May 2011. So-called real yields were negative a year ago.

Treasuries due in 10-years or more also yield about 0.54 percentage point more than the average for government debt elsewhere with similar maturities, also the most since 2011, Bank of America Merrill Lynch indexes show. The average since mid-2007 is 0.44 percentage point, with U.S. yields below the rest of the world by as much as 0.2 percentage point in July.

‘Not Convinced’

“I’m not convinced that there is any reason yields will go up a lot in the near term,” David Gerstenhaber, who founded New York-based Argonaut Management LP, said in a phone interview March 12. “Yields will likely bounce around in a range.”

The risk for bondholders is if the economy picks up speed. Even after payroll taxes rose on Jan. 1, sales at retailers jumped 1.1 percent in February, the most in five months.

Net worth for households and non-profit groups rose $1.17 trillion from October through December, or 1.8 percent from the previous three months, to $66.1 trillion, the highest since 2007, the Fed said March 7 in its flow of funds report.

“Although there are some near term risks to the U.S. economy due to the pass-through of fiscal policy, overall, we are looking for growth to be at or above trend through the balance of this year,” John Stopford, the London-based head of fixed-income at Investec Asset Management, which oversees more than $100 billion, said by telephone March 13.

Bullish Wagers

The Fed, which meets this week to discuss monetary policy, may slow the pace of bond purchases later this year, causing 10- year Treasury yields to move in a range of 2.5 percent to 3.5 percent, he said. The median estimate of more than 70 economists and strategist surveyed by Bloomberg is for the yield to end the year at 2.25 percent.

While the U.S. may be recovering, most of the world’s major economies are struggling. Growth among the Group of 10 may only be 1.15 percent this year, the least since the recession of 2009, based on the median estimate in separate surveys by Bloomberg.