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Tuesday 02nd of December 2008
June 21, 2006

Bond yields down in US, UK


by Elaine Frei

Officials of the US Federal Reserve have stopped making public comments, a customary practice ahead of rate-setting meetings, leaving government bond purchasers without much data on which to base decisions as data from other sources is also lacking at present. With summer beginning, a time of traditionally limited trade, volumes were low in the US Treasury market.

At mid-session in New York, two-year Treasury bonds were yielding 5.203 percent, unchanged from Tuesday’s levels. Meanwhile, ten-year bonds had dropped 0.4 basis points to a yield of 5.153 percent.

In the UK, release of the minutes from the Bank of England’s most recent rate-setting meeting showed that only one member had voted to raise rates. However, the rally caused by the news was limited as speculation continued that rates would rise soon after housing market data was stronger than had been expected.

Yields on two-year gilts dropped 1.9 basis points to 4.817 percent, while ten-year yields were down by only 0.1 basis point to 4.718 percent.

Eurozone yields were up after remarks from the governor of the European Central Bank that interest rates there will be going up again in the effort to control inflation. The comments came in the wake of new data from France that showed household goods purchase there have risen at their fastest rate in 20 years.

The two-year Schatz added 1.4 basis points to yield 3.470 percent, while the ten-year Bund yielded 4.008 percent, a rise of 1.1 basis point.

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