Two-Year Treasuries Rise Most on Credit Since Sept. 11 Attacks

Treasury two-year notes rose the most since the Sept. 11 terrorist attacks as credit-market losses increased speculation the Federal Reserve will lower interest rates this month.

Yields fell this week to the lowest in two years and U.S. stocks tumbled as home foreclosures led three of the biggest U.S. banks to report declines in third-quarter profit. Economic data next week is forecast by economists to show new home sales fell in September to the lowest in more than 10 years.

``The housing slowdown is going to play out for the next six months, not the next month,'' said Bill Chepolis, who helps manage $9 billion in New York at Deutsche Asset Management. ``The market is more aggressively pricing in an ease by buying two-year notes.''