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By Bloomberg

Long-term Treasuries are the best- performing government bonds for international investors this year, with the U.S. scheduled to sell 10-year notes today.

Treasuries due in a decade and longer have returned 18 percent in 2014 through yesterday, after accounting for both gains in the debt and a dollar rally. It’s the best return among 144 bond indexes around the world tracked by Bloomberg and the European Federation of Financial Analysts Societies. Treasuries are benefiting as investors snap up the U.S. currency while inflation holds in check.

“People are getting out of the emerging-market currencies because they’re weakening and getting into a stronger dollar,” said John Gorman, the Tokyo-based head of dollar interest-rate trading for Asia and the Pacific at Nomura Holdings Inc. “People might need to park some cash in Treasuries. The auction will go fairly well.” Nomura is one of the 22 primary dealers that underwrite the U.S. debt.

Ten-year yields were little changed at 2.36 percent at 6:54 a.m. in London, according to Bloomberg Bond Trader data. The price of the 2.375 percent note due August 2024 was 100 5/32.

Treasuries opened today after being closed yesterday for Veterans Day in the U.S.

In Japan, 10-year yields climbed as high as 0.525 percent, level not seen since Oct. 3. Australia’s were little changed at 3.34 percent.

Dollar Rally

The dollar is rallying as the European Central Bank and the Bank of Japan try to suppress borrowing costs to support their economies, while the Federal Reserve prepares to raise interest rates in the U.S.

An index of emerging-market currencies fell this month to the lowest level since 2009.

The U.S. plans to sell $24 billion of 10-year notes today and $16 billion of 30-year bonds tomorrow. It auctioned $26 billion of three-year notes on Nov. 10.

At the last 10-year sale in October, investors bid for 2.52 times the amount of debt offered. It was the lowest level since August 2013 at the monthly auctions.

Direct bidders, non-primary-dealer investors that place their bids directly with the Treasury, purchased 6.6 percent of the securities. The amount was the smallest since August 2012.

While the strongest six months of U.S. economic growth in a decade has futures traders pricing in the prospect the Fed will raise rates in a year, lackluster wage gains, weaker growth abroad and slumping energy prices caused investors to trim their expectations for how much consumer prices can rise.

Inflation Outlook

The difference between yields on 10-year notes and same- maturity Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices over the life of the debt, was 1.94 percentage points. It was as low as 1.83 in October, a level not seen since June 2013.

The Fed’s preferred gauge of inflation has fallen short of its 2 percent target for more than two years.

Data today will show wholesale inventories rose 0.2 percent in September, following a 0.7 percent increase in August, based on a Bloomberg News survey of economists.

Yoshiyuki Suzuki, the head of fixed-income in Tokyo at Fukoku Mutual Life Insurance Co., said 10-year yields are too low given the outlook for U.S. economic growth.

“I don’t want to buy at this level,” he said. Fukoku, with $54.2 billion in assets, is accumulating cash instead of buying bonds, he said.

Ten-year yields will climb to 2.62 percent by Dec. 31, based on a Bloomberg survey of economists, with the most recent forecasts given the heaviest weightings. While projecting an increase, the forecast has fallen from as high as 3.43 percent in January.