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Sunday 12th of October 2008
August 30, 2006

Bond yields fall on data


by Elaine Frei

Yields on US Treasury bonds were lower and prices rose on Wednesday on new data that showed the core inflation rate for the second quarter was less than originally reported, while the economy grew faster in the quarter than had been estimated earlier. The president of the Dallas Federal Reserve commented that he was still not happy with the inflation data, but that the GDP numbers were “healthy”.

Ten-year Treasury bonds were yielding 4.767 percent, a decline from their late Tuesday yield of 4.785 percent.

In the Eurozone, yields were also down ahead of the next meeting of the European Central Bank, scheduled for Thursday. The ECB is expected to hold interest rates steady this year, but analysts are looking for a hike in October. Higher prices for US Treasury bonds also helped Eurozone prices up. The ten-year Bund yielded 4.54 percent late in the session, a decline of 3 basis points.

Gilt yields in the UK were also lower late in the day, as the ten-year gilt dropped 2 basis points to 4.54 percent. Earlier in the day, bond prices lagged as new UK economic data was fairly strong, putting into question what the Bank of England will do about interest rates when it meets next. Mortgage rates and new loan approvals wee both up in July to their highest points since the beginning of the year.

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