The yield gap between 10- and 30-year Treasuries widened to themost in a year on concern the Federal Reserve's plan to buy moredebt and pledge to keep monetary policy accommodative even when theeconomy strengthens will spur inflation.

The difference touched 1.21 percentage points, the most sinceAugust 2011, as yields on 30-year debt, more sensitive to inflationbecause of its longer maturity, climbed to the highest since May.The drop in prices followed a $13 billion sale of bonds just beforethe Federal Open Market Committee said it would expand its holdingsof long-term securities with mortgage- debt purchases. It also saidit would probably keep interest rates at virtually zero into2015.

“They are erring on the side of trying to promote additionalgrowth,” said Jeff Phlegar, chairman and chief executive officer inNew York at MacKay Shields LLC, an advisory firm that oversees $70billion in fixed-income assets. “They are not concerned aboutinflation.”

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