Bond yields fall on interest rate concerns

Government bond prices were mostly lower and yields were higher on Monday in several major nations as traders worried about interest rates that are likely to go up in the near term.

The announcement in Japan on Thursday that the Bank of Japan is abandoning ita��s loose monetary policy, coupled with comments from a Bank board member on Monday that were very close to calling for interest rates to begin rising soon, sent yields on government bonds there to five-year highs. Yields on the two-year bond were up 4.5 basis points to 0.515 percent, while the ten-year bond was yielding 1.690 percent, up 3.5 basis points. Yields on the five-year bond were up 7 basis points on the day and up 14.5 basis points since Thursdaya��s close, to 1.180 percent.

Prices fell on eurozone bonds ahead of a sale of a��20 billion in new issues scheduled for later in the week. Late in the day, the two-year Schatz was yielding 3.257 percent, a gain of 7.4 basis points, while the ten-year Bund was up 4.2 basis points to a yield of 3.709 percent.

In the UK, gilt yields were up on diminishing chances that an interest rate cut is forthcoming from the Bank of Englanda��s monetary policy committee and on higher than expected producer price and house price data. Two-year gilts were yielding 4.456 percent, up 4.2 basis points and ten-year gilts were up 0.5 basis points to 4.357 percent.

US Treasury bond yields were mixed on the strength of Fridaya��s employment data and ahead of the release of several sets of data later in the week. In late-morning trade, two-year bond yields were lower by 0.4 basis points to 4.738 percent, while ten-year bond yields were up 2.2 basis points to 4.783 percent.


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