Treasurys

Treasuries are also likely to be supported as inflation can keep slowing even if growth does remain relatively healthy. The investment bank is advising its clients buy Treasury five-year notes and 30-year inflation-linked debt.

The surprisingly resilient US economy, ballooning debt and deficits, and escalating concerns that the Federal Reserve will hold interest rates high are driving yields on the longest-dated Treasuries back to the highest levels in over a decade.

The negative return, though not the first this year, signifies that the interest income the assets throw off is more than offset by the price declines associated with rising yields.

The latest offering will get Citadel Securities closer to its long-held ambition to become a primary dealer — a designation the Federal Reserve typically bestows only to firms active across all types of Treasury securities.

The yield on 30-year securities has climbed almost 25 basis points over the past three sessions, returning it to levels last seen in mid-November when inflation was still above 7%, more than double the current rate.

Wednesday's announcement will likely also see debt managers hoist regular auction sizes for securities across the yield curve — with potential exceptions or smaller bumps for notes less in demand.

In their latest assessment of the bond market outlook, Morgan Stanley strategists are challenging the former head of the Federal Reserve Bank of New York's view that losses are likely to deepen.

The market for wagers on the outlook for central bank policy shows traders now expect the benchmark rate to peak in September, instead of July.

They are bullish on equities in Japan, Taiwan and South Korea and recommend an overweight position in developed-market government bonds, including long-dated Treasuries

The Treasury's cash balance fell to just $37.4 billion on Tuesday, according to data published Wednesday. That more that reverses the previous day's bounceback.