Global bond yields rise

Yields on government bonds rose Wednesday after Tuesday’s interest rate hike in the US and on fears that the European Central Bank might soon follow suit after business sentiment in Germany was reported on the rise earlier in the week.

Yields on US Treasury notes were up early and then down later in New York. Two-year bonds hit a five-year high yield of 4.828 percent before dropping 1.2 basis points to 4.795 by the middle of morning trade. Yields on ten-year bonds went to 4.810, their highest level since the middle of 2004 before also dropping 1.2 basis points later on to a yield of 4.782 percent. The early gains in yields came as some traders had expected more of an indication in the comments issued by the Federal Reserve that the rate hikes would come to an end soon.

Comments from the ECB indicating that eurozone interest rates might soon rise sent the two-year Schatz to 3.289 percent, its highest yield since October 2002, early in the day. Even a steadying later left the Schatz with an increase of 0.6 basis points to 3.278 percent. The ten-year Bund gained 1.4 basis points to yield 3.758 in late trade.

Gilt prices in the UK found some help in weaker new data on retail sales and mortgage lending, but yields were still up on the day, with two-year gilts up 1.5 basis points to 4.465 percent. Ten-year gilts gained 0.6 basis points to a yield of 4.376 percent.

Japanese government bonds also saw yields go up. The five-year bond was up 9 basis points to 1.295 percent, while the ten-year bond gained 7.5 basis points to yield 1.775 percent.

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