Bond yields up on interest rate expectations

Yields on government bonds were up in most major markets on Thursday as the likelihood increased that the US Federal Reserve would raise interest rates later in the month. In addition to a hike this month, analysts are increasingly convinced that there will also be a rate hike at the Fed’s August meeting.

At mid-day in New York, two-year Treasury bonds added 2.6 basis points to 5.146 percent, nearly a five-year high, while yields on ten-year notes were up 3 basis points to 5.100 percent.

In the Eurozone, inflation concerns affected bond yields. The two-year Schatz was yielding 3.392 percent late in the trading day, a gain of 3.7 basis points. Meanwhile, the ten-year Bund was 4.4 basis points higher to a yield of 3.948 percent.

UK gilts saw yields rise, as well. Two-year yields were up 4.2 basis points to 4.733 percent, while the yield on ten-year gilds were at 4.622 percent, a rise of 8.9 basis points. New data showed that retail sales there is up more than had been expected and prices on new houses are rising faster than they have in two years.

In Japan, yields on the ten-year government bond stood firm at 1.770 percent as there was essentially no reaction to the Bank of Japan’s expected decision to keep interest rates at zero for the time being.

Discuss this in the Finance Markets forums

Story link: Bond yields up on interest rate expectations