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Tuesday 02nd of December 2008
July 25, 2006

US Treasury bond yields up on rate speculation


by Elaine Frei

The prices on US Treasury bonds were lower on Tuesday on mixed data that revived speculation that the Federal Reserve will not yet be ready to hold the line on interest rates when it meets next month. Consumer confidence was up in July, with The Conference Board’s index putting optimisim at 106.5, higher than the June figure of 105.4. Additionally, while the sales of existing homes was at 6.62 million in June, below the May figure of 6.71 million, sales did not drop as much as had been expected.

At late morning in New York, the two-year Treasury bond was up 3 basis points to a yield of 5.119 percent, while ten-year issues were yielding 5.067 percent, a gain of 1.8 basis points.

In the Eurozone, government bond yields moved little, with the two-year Schatz down 0.5 basis points to yield 3.521 percent but the ten-year Bund up 0.1 basis point to 3.963 percent. Meanwhile in the UK, yields on two-year gilts were 3.2 basis points higher to 4.750 percent, while the ten-year gilt gained 2 basis points to 4.620 percent.

Yields were also up on Japanese government bonds on profit-taking after last week’s price gains that came on evidence that the Bank of Japan will be cautious in raising interest rates there further. The two-year government bond was up 2.5 basis points to 0.845 percent, while the ten-year bond added 2 basis points to 1.88 percent. The 20-year Japanese government bond gained 1 basis point to 2.31 percent after a sale of ¥800 billion in 20-year bonds attracted a demand of 2.75 times the amount available for sale.

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