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Thursday 20th of November 2008
March 22, 2006

Government bond yields mostly lower


by Elaine Frei

Government bond yields were down in the United States and in Europe on Wednesday, while yields on Japanese government bonds were mixed on the day.

In the Eurozone, yields were up directly after hawkish comments from a member of the European Central Bank’s governing council, but later in the day yields on the ten-year Bund were down 1.9 basis points to 3.646 percent on a soft sentiment report from Belgian that some analysts said could be a precursor to a weak Ifo sentiment report from Germany next week.

Release of a new budget in the UK sent yields on both shorter and longer-dated gilts up and then down during the day. The ten-year gilt yields were up to 4.397 percent but were later down by 3 basis points to 4.304 percent. Thirty-year yields dropped from an early yield of 4.127 percent to lose 4.9 basis points to a yield of 4.012 percent later.

Yields on US Treasury notes fell on lower volumes as traders bided their time, waiting for some indications as to what the Federal Reserve will do about interest rates when it meets next week. At late morning in New York, two-year Treasuries had lost 0.9 basis points to 4.734 percent, while ten-year notes had dropped 1.8 basis points to 4.707 percent.

In Japan, yields were mixed in anticipation of eventual interest rate rises by the Bank of Japan. Two-year government bonds gained 2.5 basis points to 0.575 percent, a five-year high, while ten-year bonds were down 0.5 basis points to 1.725 percent.

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