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Eurozone government bonds up, gilts mixed


by Elaine Frei
February 20, 2006

Prices on government bonds were up in the eurozone and in Japan on Monday, while they were mixed in London.

In the eurozone, prices were up and yields down, continuing a rally that began last week. This was true even though new data showed that producer prices were up by 1.2 percent in Germany in January, equal to a 5.6 percent annual rise, the highest in over ten years.

In afternoon trade, the two-year Schatz was yielding 2.879 percent, down 1.1 basis points, while the ten-year Bund was 1.6 basis points lower at a yield of 3.437 percent. Trade was light, at least partially due to the closure of US markets for the Presidents Day holiday.

In Japan, yields on the ten-year government bond fell 0.5 basis points to 1.510 percent as Japanese stocks saw another decline on the day. The ten-year bond actually was down to a one-month low yield of 1.5 percent. Higher bond prices were seen as supported by strength in the US government bond market on Friday.

Meanwhile in London, housing data that showed average asking prices on property in the UK were up 2.7 percent in February, the biggest jump in two years, had a mixed effect on gilts. The two-year gilt saw yields up 1.8 basis points to 4.223 percent, but ten-year yields were down 1.3 basis points to 4.116 percent.



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