The U. S. interest-rate swap spread narrowed largely as Greece prepared to unveil measures to cut the European Union’s largest deficit, hoping optimistically that credit risks will continue.

“The Greek plan will spur an unwinding of flight to quality, so yields may climb higher. The narrowing swap spread means that short-term funding is not a problem and financial market conditions are now back to normal”, said Kazuaki Oh’e, a Bond Salesman in Tokyo at Canadian Imperial Bank of Commerce.

The benchmark 10-year note yielded 3.61% in Tokyo. The 3.625% security and the similar-dated swap rates traded at 3.68%. A basis point is 0.01% point.

An additional spending cut of 4.8 Billion Euros will be announced by Greece’s Government, bowing to pressure from the EU and investors.

“There will be low volume and low volatility up until Friday”, Kevin Giddis, Head of fixed-income sales, trading and research at brokerage firm Morgan Keegan Inc. in Memphis, Tennessee.

“The economy is growing, but the momentum seems to be slowing”, said Tsutomu Komiya, who handles U. S. government debt in Tokyo at Daiwa Asset Management Co.