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Saturday 06th of December 2008
June 29, 2006

Bond yields drop in the US, UK, and Eurozone


by Elaine Frei

Yields were down on US Treasury bonds Thursday ahead of an announcement on interest rates from the US Federal Reserve. Analysts were expecting a relief rally in the event that the Fed does as expected and raises rates by 25 basis points to 5.25 percent.

At midday in New York, two year bonds had dropped 2.9 basis points to a yield of 5.254 percent, while ten-year bonds were down by 3.1 basis points to yield 5.220 percent.

In the Eurozone, yields were down and prices up as investors waited for the Fed’s decision on a rate hike. The drop in yields came although the region’s money supply was up by 8.9 percent in May, a bit more than had been expected, while money supply growth in April was revised downward from 8.8 percent to 8.7 percent.

Late in the day, the two-year Schatz dropped 3.8 basis points to 3.563 percent. The ten-year Bund, meanwhile, was down 3.5 basis points to 4.061 percent.

Prices were up on UK gilts after Bank of England officials made statements implying that interest rate hikes are not likely in the near term. Yields on the two-year gilt were down 3.8 basis points to 4.808 percent, while ten-year yields were at 4.714 percent, down by 3.2 basis points.

In Japan, government bond yields were up ahead of new data on the domestic economy. The five-year government bond added 2 basis points to 0.875 percent, while the ten-year bond gained 1 basis point to 1.925 percent.

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