The deficit expansion may increase the sale of U.S. Treasury notes for the first time since 2004 and threaten the biggest bond rally since 2002. UBS Securities LLC, one of the 21 primary dealers that underwrite Treasury auctions, said auctions started this month may increase 50% to $220 billion. "Unless the economy turns on a dime and starts to show strength again, we're going to be looking at increased Treasury issuance beginning with bills later this year and spreading out across all Treasuries beginning in the first quarter," said William O'Donnell, head of U.S. government bond strategy at Zurich-based UBS AG's securities unit.

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