Finance Markets

May 3, 2006

Government bond yields down in Eurozone

Permalink: Government bond yields down in Eurozone

Filed under: Bonds, Economy, Politics

Yields were up on Eurozone government bonds on Wednesday ahead of a meeting of the European Central Bank on Thursday. The Bank is expected to keep interest rates at 2.5 percent for the time being, but new economic data has many analysts expecting that rates will be raised sooner rather than later. Producer price inflation was up in the latest figures, while unemployment fell from 8.2 percent in March to 8.1 percent in April, the lowest it has been in four years.

By late afternoon, yields on the two-year Schatz had risen by 4.6 basis points to 3.386 percent, while the ten-year Bund was yielding 3.990 percent, a gain of 1.9 basis points.

In the UK, however, most gilt prices were up and yields were down, primarily on demand for longer-dated issues. Fifty-year gilt yields were down by 5.1 basis points to 4.051 percent, while thirty-year yields dropped 4.4 basis points to 4.247 percent and ten-year gilts were 3.2 basis points lower at a yield of 4.627 percent. Only two-year gilts saw yields rise, and then only by 0.5 basis points to 4.659 percent.



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