Finance Markets

September 21, 2006

US Treasury bond yields lower on sentiment

Permalink: US Treasury bond yields lower on sentiment

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields were lower on US Treasury bonds on Thursday after the Philadelphia Federal Reserve Bank’s economic index fell to -0.4 in September. The index was at 18.5 in August, and had only been predicted to drop to 14.7 this month. The new reading indicates that manufacturing has contracted in the region, likely on the slowing housing market and lower consumer spending. Also contributing to lower yields was data showing more jobless claims last week than had been predicted.

By late morning in New York, two-year Treasury bonds were yielding 4.76 percent, a decline of 4.7 basis points. Meanwhile, ten-year issues had dropped 5.5 basis points to 4.68 percent, leading to an increase in the yield curve inversion.

Late in the day in Europe, Eurozone government bond yields were also lower. The two-year Schatz was 2.3 percent lower to a yield of 3.626 percent, while the ten-year Bund was yielding 3.758 percent, a decline of 2.9 basis points.

Yields were mixed in the UK late in the session, as the two-year gilt added 0.1 basis point to 4.979 percent, but the ten-year gilt fell by 2.7 basis points to a yield of 4.574 percent.

In Japan, the ten-year government bond was 2 basis points higher to 1.705 percent as the equities markets were slightly higher on the session. The price decline came even though there was strong demand for an auction of ¥800 billion in 20-year bonds.

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