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Saturday 22nd of August 2009
June 12, 2006

Bond yields up in US, Japan


by Elaine Frei

Government bond yields were up in the US and in Japan on Monday, but fell in the Eurozone and in the UK.

In the United States, yields on two-year and ten-year Treasury notes continued the inversion that began last week, signaling that investors are worried that more interest rate hikes, now widely expected, will hurt economic growth and possibly even send the US economy into a recession. By late morning in New York, two-year Treasuries had added 1.3 basis points to a yield of 5.018 percent, while ten-year notes were up 1 basis point to 4.989 percent.

Japanese government bonds saw yields climb on news that economic growth there in the first quarter had been revised significantly higher. This heightened expectations that the Bank of Japan will abandon its zero interest rate policy during meetings this week. All of this sent yields on the ten-year government bond to 1.865 percent, 1.5 basis points higher.

Trade in government bonds was light in the Eurozone as investors waited for the release of new consumer price inflation data, ,due on Thursday. The buying that did take place was largely due to investors seeking safe places for their money as European equity markets saw declines. The two-year Schatz yielded 3.323 percent, a decline of 2.4 basis points, while the ten-year Bund dropped 1.8 basis points to 3.911 percent..

Yields dropped in the UK as well in answer to mixed data on producer prices and in anticipation of new consumer price data to be delivered on Thursday. The two-year gilt was down 1.3 basis points to 4.644 percent and the ten-year gilt yielded 4.536 percent, a decline of 3.1 basis points.

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