``People are willing to come in and take a chance'' on Treasuries given rising oil prices and signs of an economic slowdown, said Bill Strazzullo, chief market strategist in Boston at State Street Corp., the biggest manager of funds for institutional investors. Ten-year yields reached ``an important support area'' above 4.6 percent that drew buyers, he said.

The 4 3/4 percent note maturing in May 2014 advanced 1/16, or 63 cents per $1,000 in face value, to 101 3/8 at 5:01 p.m. in New York, yielding 4.57 percent, according to bond broker Cantor Fitzgerald LP. On Tuesday, the yield rose to 4.64 percent, the highest this month, from 4.35 percent the week before. The yield hadn't risen that high since June 30, before the release of June labor statistics on July 2.

Crude oil traded at $42.75 per barrel, after yesterday reaching a record $43.05. Oil prices at all-time highs may prompt the Federal Reserve to delay interest-rate increases on concern growth in the world's largest economy may slow, according to State Street analyst Harvinder Kalirai.

Oil prices over the ``medium term'' are likely to remain above the targets of $30 a barrel set by the International Monetary Fund, IMF managing director Rodrigo Rato said.

Treasuries rose yesterday after government figures showed orders for items made to last at least three years rose 0.7 percent in June after falling a revised 0.9 percent in May. Orders were expected to rise 1.5 percent, according to the median forecast of 67 economists surveyed by Bloomberg News.

Oil as Tax

A Fed report yesterday said the U.S. economy grew at a slower rate in June and early July.

The jump in oil prices ``slows the economy'' and is ``a tax on the consumer,'' said Don Alexander, a fixed-income strategist in New York at Citigroup Private Bank, which has $202 billion in assets. While Alexander said higher oil prices suggest Treasuries may have fallen too far for the time being, 10-year note yields will still exceed 4.9 percent by year-end.

Yields have risen about a quarter-percentage point since last week, when Fed Chairman Alan Greenspan suggested a June slowdown in consumer spending will be temporary. An industry report Tuesday showed consumer confidence climbed to a two-year high in July, an indication Greenspan may prove correct.

``The market is nervous maybe growth is going to be stronger than expected,'' said David Ging, government bond strategist at Credit Suisse First Boston LLC in New York. ``You need to see some evidence June weakness was not an aberration to prevent the market from going down.''

`Betting Wrong'

Yields on 10-year notes will reach at least 4.7 percent in the next week, said Ging, whose firm is one of 22 primary government securities dealers that trade with the Fed's New York branch.

The four-week moving average of jobless claims fell to 336,250, even as claims last week rose 4,000 to 345,000, the Labor Department said today in Washington.

Policy makers lifted the Fed's target for overnight lending between banks on June 30 for the first time in four years to prevent inflation from taking hold. They said a portion of consumer price gains ``appears to have been due to transitory factors.'' The Fed's next meeting is Aug. 10.

``Investors were betting on the economy slowing down significantly; they were betting wrong,'' said Stephen Gallagher, chief economist at Societe Generale in New York. The confidence report ``gives you a sense we really do have some underlying strength in the economy.'' He expects the 10-year yield to climb to 5 percent by year-end.

Auctions

An industry report tomorrow is projected to show that Chicago-area manufacturing grew more quickly in July, according to the median forecast of economists surveyed by Bloomberg News.

Treasuries also fell this week as the government sold $11 billion in 20-year inflation-linked debt and $24 billion of new two-year notes.

The December Eurodollar futures contract yielded 2.42 percent, up from 2.395 percent Friday. The yield indicates traders expect the Fed's key rate to reach 2.25 percent by early 2005. The contract settles at a three-month lending rate that has averaged about 0.22 percentage point above the Fed's target in the past 10 years.

``Greenspan's made it pretty clear the Fed is going to continue to raise rates even though they're going to do it at a measured pace,'' said Joseph Shatz, government bond strategist in New York at Merrill Lynch & Co., another primary dealer. ``Yields are going to slowly trend higher''

Bond Firms

More of Wall Street's biggest bond-trading firms say the central bank will boost borrowing costs to at least 2 percent by year-end, the highest level since 2001.

Economists at 18 of the 22 primary dealers, firms that trade with the Fed's New York branch, predict rates will rise to 2 percent or more from the current 1.25 percent, according to a Bloomberg News survey. In mid-June, 14 of the then 23 primary dealers anticipated a federal funds rate of 2 percent by year- end.

Yields on two-year notes have risen at a faster pace than those on 10-year notes, another indication traders anticipate more Fed rate increases. The gap in yields has narrowed to 1.82 percentage points, from the peak this year of 2.48 percentage points in January. The 2 3/4 percent note maturing in July 2006 yielded 2.74 percent.