US bond yields rise on strong data

US Treasury bonds traded very close to previous levels on Thursday as investors had several items of economic data to take into consideration while making buy and sell decisions.

New housing starts in the US were reported up in January and a report from the Federal Reserve Bank in Philadelphia showed a very strong increase in its February activity index. Meanwhile, new Fed chairman Ben Bernanke continued his testimony before Congress. Yesterday’s comments by Mr. Bernanke included his opinion that the inversion of the Treasury yield curve did not imply anything negative for the overall economic outlook in the US.

Immediately after the release of the Philadelphia Fed data, two-year bond yields had advanced by 0.3 basis points to 4.672 percent and ten-year yields were up 0.2 basis points to 4.602 percent.

In the UK, meanwhile, gilt yields fell on data, including lower-than-expected retail sales in January, that seemed to encourage the case for interest rate cuts by the Bank of England. One analyst said that the talk of a recovery in retail sales prompted by increased in November and December were premature.

Ten-year gilt yields dropped 1.8 basis points to 4.175 percent, while yields on two-year gilts dropped even further, by 3.2 basis points to 4.218 percent.

Yields in the Eurozone were mixed as France and Spain held new bond sales and an official of the European Central Bank issued hawkish comments. Yields on the ten-year Bund were up 2.3 basis points to 3.511 percent, but the two-year Schatz saw yields drop 0.6 basis points to 2.931 percent.

Elsewhere, the Japanese 10-year government bond was yielding 1.545 percent, a decline of 2 basis points.