$20 billion auction in 2 year bonds “healthy”

An auction of $20 billion in 2-year US Treasury bonds on Wednesday was called “healthy”, with a 44 percent indirect bid, something that indicates the interest of foreign and institutional bidders, but the sales was still a victim of the end-of the summer doldrums in the markets.

Otherwise, US economic data was mixed with reports of record sales of new homes in July but a drop in orders for durable goods.

During afternoon trading in New York, 2-year Treasury bonds had declined by 0.4 basis points to yield 3.984 percent, while the 10-year bond lost 1.3 basis points to a yield of 4.171 percent.

Yields were also down on UK gilts on revived talk that the Bank of England might cut interest rates again before the end of the year.

The basis of this speculation was a report showing manufacturing orders down to their lowest level since October 2003, putting in question the idea that the manufacturing sector could help the growth of the GDP in the UK in the third quarter.

The 2-year gilt yielded 4.173, down 0.3 basis points, while the 10-year gilt dropped 1.1 basis points to 4.235 percent.

Prices were down and yields up on eurozone government bonds after the release of strong data on industrial orders in the region.

The 2-year Schatz gained 2.4 basis points to yield 2.216 percent and the 10-year Bund added 1 basis point to yield 3.171 percent.

Meanwhile, yields on 10-year Japanese government bonds fell by 3.5 basis points to 1.415 percent.