Bond markets uncertain on economic data

Conflicting data left the market for US Treasury bonds not sure where to go on Wednesday as one survey showed a strong service sector in June while another report suggested that job layoffs had risen during the month.

This brought attention to the monthly employment data to be released on Wednesday.

At mid-day in New York, the 2-year Treasury bond had lost 1.7 basis points to yield 3.773 percent, while the 10-year bond declined by 3.3 basis points to a yield of 4.078 percent.

Markets in the eurozone and in the UK were affected by anticipation of interest rate announcements scheduled for Wednesday, while expectations were that rates would remain the same in both regions at 2 percent in the eurozone and 4.75 percent in the UK.

Hopes for a eurozone rate cut are diminishing as weakness in the euro makes a cut seem unnecessary.

Slowdowns in the growth of the UK economy, however, are making the prospect of a rate cut there by the end of the year seem more likely.

In the eurozone, the 2-year Schatz gained 0.3 basis points to yield 2.168 percent and the 10-year Bund was up 1.1 basis points to yield 3.222 percent.

Yields on UK gilts were mixed as the 2-year gilt lost 0.5 basis points to yield 4.142 percent, while the 10-year gilt gained 2.1 basis points to yield 4.284 percent.

Meanwhile in Japan, the 10-year Japanese government bond was up 1 basis point to yield 1.295 percent, at least partly on concerns that the vote by the lower house of the Japanese parliament in favor of privatization of the post office could lead to political instability.

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