Bond yields fall as Bank of England cuts interest rates

In the UK on Thursday, bond yields fell after the Bank of England’s monetary policy committee cut interest rates a expected. It was the first rate cut in two years.

Reaction to the cut was minimal because the cut had been expected, but some analysts said that the market could be affected more as the debate heats up concerning whether this rate cut was an isolated move or the beginning of a series of cuts.

The 2-year gilt lost 4 basis points to yield 4.18 percent, while 10-year gilts slipped by 1 basis point to a yield of 4.37 percent.

In Japan, the 10-year government bond gained 2.5 basis points to yield 1.4 percent, a 2-month high, as a vote on post office privatization in the upper house of parliament that had been scheduled to take place on Friday was postponed until next week.

In the United States, bond yields were up as investors anticipated Friday’s payroll figures from the Labor Department. Most analysts expect that the department will report that around 180,000 new jobs were created in July.

One analyst said that bond yields are likely to fall if the figures announced are as expected. Investors were also looking forward to new bond auctions and a meeting of the Federal Reserve next week. The 2-year Treasury bond gained 1.7 basis points to a yield of 4.040 percent and 10-year bonds were up 2.2 basis points to yield 4.318 percent.

Yields on the 10-year Bund sat at 3.31 percent at the close of trade after the European Central Bank kept eurozone interest rates at 2 percent, as expected.