WASHINGTON -- U.S. economic growth is certainly good news to the government, corporations and consumers, but it's also a double-edged sword. U.S. Treasury bond sales may drop to their lowest point in five years, say analysts, as economic growth shores up corporate tax revenue and consequently reducing the government budget surplus.

A 2005 study conducted by the National Bureau of Economic Research found that lower deficits tend to reduce yields. The study looked at Treasuries from 1950 to 2003, and it showed a one percentage point decrease in the deficit as a share of gross domestic product, lasting for three years, cuts about 0.35 percentage point from a 10-year note yields.

Note and bond sales for the fiscal year that began in October 2005 may drop as much as 32 percent to $140 billion, observed on analyst at Deutsche Bank ASG, who noted that the last time the Treasury Department sold less was reportedly in 2002.

The Congressional Budget Office last week cut its estimate for this year's budget shortfall by 40 percent to $172 billion after an increase in corporate profits boosted tax receipts 23 percent in the first three months of the fiscal year.

Investors have opined that a drop in sales may help end a two-month decline that has resulted in a 1.46 percent loss for Treasuries.

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Merrill Lynch data show Treasuries have declined 0.43 percent so far this year, compared with a gain of 3.14 percent for all of 2006. Government bonds haven't declined for a full year since 1999 when they lost 2.38 points.

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