Bonds mixed in Europe after US 30-year sale
The bond markets in the UK and Europe saw mixed results on Friday in the wake of a more-than-successful sale of 30-year long bonds in the US on Thursday. Meanwhile, yields on Japan’s 10-year government bond were up in anticipation of changes in the Bank of Japan’s monetary policy.
The U.S. Treasury received bids for 2.05 times the $14 billion in new 30-year bonds being offered for sale on Thursday, where indirect bidders, which are an indication of demand from foreign investors and “real” money fund managers, amounted to a very strong 65.4 percent of the bids.
News of the U.S. sale’s success, along with data showing that the French economy grew less than had been expected during the fourth quarter of 2005, brought mixed results in the European bond market. Yields on the two-year Schatz fell 1.9 basis points to 2.910 percent, while 10-year Bund yields gained 1 basis point to 3.464 percent.
Profit taking sent yields on the two-year gilt in the UK up 3.2 basis points to 4.286 percent. The 10-year gilt held its ground at a yield of 4.162 percent.
In Japan, the 10-year government bond saw yields up 4 basis points to 1.595 percent, while the 5-year government bond yielded 1.025 percent, a jump of 7.5 basis points, and the 2-year government bond saw yields rise 4.5 basis points to 0.365 percent, its highest in 5 years.
Most of the Japanese yield gains had to do with investors’ responses to the Bank of Japan governor’s comments concerning his belief that the consumer price index would rise higher than January’s level, an indication of the end of deflation and that the Bank could soon end its loose monetary policy. Most analysts believe that this change could come sometime in the spring.
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