Bond yields down on inflation, interest fears

Yields on government bonds were down during the week as their safe haven status overcame investor worries about inflation.

In the United States, two-year Treasury bonds saw yields up a slight 0.4 basis points to 4.933 percent in morning trade, but over the week yields still dropped 8 basis points. Meanwhile, yields on ten-year Treasury issues dropped 3.3 basis points early in the day to a yield of 5.030 percent for a total declined of over 17 basis points during the week.

Bonds in the Eurozone saw yields drop as well, as the two-year Schatz lost 0.8 basis points on the day and 9.6 basis points over the week to a yield of 3.299 percent. The ten-year Bund was down 1.8 basis points for the day and 9 basis points for the week to yield 3.989 percent.

In the UK, gilts were mixed on the day but down over the week. The two-year gilt dropped 1.9 basis points during the day and 9 basis points over the week to a yield of 4.731 percent. While the ten-year gilt added 2.8 basis points on the day Friday, they were still down by around 13 basis points during the week to yield 4.603 percent. The week’s declines in yields came despite the possibility that the Bank of England might raise interest rates sooner rather than later.

In Japan, the ten-year government bond dropped 3.5 basis points to a yield of 1.905 percent even though new gross domestic product figures showed that the Asian nation’s economy had grown at a faster rate over the first quarter than had been anticipated.

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