Rate decisions move bond yields

In the Eurozone on Thursday, yields on government bonds were down and prices rose after the president of the European Central Bank made comments to the effect that the Bank has no intention of raising interest rates in May, contrary to the expectations of many analysts. The remarks came after the Bank voted to leave interest rates at their current level of 2.5 percent.

Yields had risen almost 5 basis points to 2.887 percent on ten-year bonds before the rate decision was announced. After the decision and remarks, the yield on the ten-year Bund dropped significantly, although by afternoon it was still up 1.7 basis points to 3.855 percent. Yields on the two-year Schatz were down by 2.3 basis points to 3.274 percent.

The monetary policy committee of the Bank of England also voted on interest rates on Thursday and followed the ECB in keeping rates at their current level of 4.5 percent. The decision was expected by most analysts, who do not expect rates in the UK to begin rising until the second half of next year.

Yields on gilts did not, however, imitate those in the Eurozone. Two-year gilt yields were up 2.1 basis points to 4.431 percent, while ten-year yields added 3.4 basis points to 4.409 percent.

Meanwhile in Japan, prices on government bonds dropped as equities markets hit long term highs. Five-year government bonds yielded 1.350 percent, a gain of 5 basis points, while the ten-year government bond added 2.5 basis points to a yield of 1.860 percent for its highest close in a year and two-thirds.

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