The two-year note yields were pushed to a record low, as Treasuries moved towards a weekly gain. Uncertain manufacturing growth along with declining producer prices, have led to the increased fears of deflation.

For a third consecutive day, the traders cutting bets on inflation eroded the value of a bond’s fixed payments. Officials like Federal Reserve Chairman, Ben S. Bernanke should have prepared measures to stimulate economic growth, shared former Bank of England policy maker David Blanchflower, pertaining to the risk of a deflation “nightmare”.

Hiromasa Nakamura manages about $21.7 billion in assets as a senior investor in Tokyo at Mizuho Asset Management Co., which is a unit of Japan’s second-largest publicly traded bank.

Nakamura said, “Treasury yields will decline. Deflation pressure is continuing. The Federal Reserve has to keep its low interest rates. Mizuho is favoring Treasuries over yen- and euro-denominated bonds”.

A growth of about 3% is expected this year by Richmond Federal Reserve Bank President, Jeffrey Lacker. He added that there is a least possibility of a double-dip recession in the United States, but Fed can resume purchasing of the assets.

According to BGCantor Market Data, the standard 10-year note produced 2.99% as of 12:45 p. m. in Tokyo. A record low of 0.5767% set yesterday, which is opposed to the two-year rate, which was 0.60%.