(Bloomberg) -- Treasuries reached the cheapest level relative to stocks in 3 1/2 years before U.S. data today projected to show durable-goods orders rebounded, bolstering the case for the Federal Reserve to further slow stimulus.

The Standard & Poor’s 500 Index climbed to a record in New York yesterday, cutting the ratio of estimated corporate earnings to share prices to 6.06%, according to data compiled by Bloomberg. The difference between the earnings yield and the 10-year Treasury yield narrowed to 3.13%age points yesterday, the least since May 2010 and compares with the three-year average of 5.09 points.

“Tapering in quantitative easing isn’t resulting in risk- off because the U.S. economy is getting better,” said Kiyoshi Ishigane, a senior strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees more than $67 billion. “I see little risk that bond yields will climb rapidly as inflation is in check.”

The yield on the benchmark 10-year note was little changed at 2.93% at 6:49 a.m. in London. It touched 2.96% at the end of last week, the highest since Sept. 11. The 2.75% security maturing in November 2023 traded at 98 15/32.

The Securities Industry and Financial Markets Association recommends trading of Treasuries close at 2 p.m. New York time today and stay shut Dec. 25 for the Christmas holiday, according to the group’s website.

Bookings for goods meant to last at least three years increased 2% last month from October, when it dropped 1.6%, according to the median estimate of economists surveyed by Bloomberg News. The figure that’s due for release today from the Commerce Department follows a report yesterday showing consumer spending climbed in November by the most in five months.

Fed Policy

The Federal Open Market Committee said after its Dec. 17-18 policy meeting that it will cut its monthly purchases of Treasuries and mortgage-backed bonds by $5 billion each to $40 billion and $35 billion respectively beginning next month. It will slow buying “in further measured steps at future meetings” if the economy improves as forecast, the FOMC said in a statement.

Treasuries have lost 3% this year, according to the Bloomberg World Bond Indexes. The S&P 500 has returned 31% including reinvested dividends.

Five-year notes rallied following a four-day decline, the longest since the five days ended June 25. The 14-day relative- strength index for the securities’ yields climbed to 74 yesterday, the highest since July and above the 70 level that signals the yields may have jumped too much, too fast and may be about to change direction.

The five-year note yield slid one basis point, or 0.01%age point, to 1.68%. It rose to as high as 1.71% yesterday, a level unseen since Sept. 13.

In Japan, the benchmark 10-year government note yield was little changed at 0.68%.