Bond yields down on week

| August 18, 2006

Yields were lower on US Treasury bonds on Friday as August consumer sentiment figures were lower than had been anticipated. Also contributing to the rise in prices were remarks by the president of the Dallas Federal Reserve which indicated that the economy is beginning to slow.

Yields on the ten-year Treasury bond were down by 1 basis point at late morning on Friday and 12 basis points lower for the week to a yield of 4.859 percent. The two-year Treasury note was 0.9 basis points lower on the day and 9 basis points lower during the week to 4.896 percent.

UK gilt yields were also lower after a number of economic reports there did not help define a direction for the British economy. Yields on the ten-year gilt were down by 5.4 percent to 4.603 percent, while two-year gilts yielded 4.869, down 2.7 basis points.

In the Eurozone, the ten-year Bund dropped 1.5 basis points to 3.898 percent, while the two-year Schatz was 1 basis point lower to 3.613 percent. At the beginning of the week, yields were at 4 percent and 3.655 percent respectively.

Meanwhile, yields of Japanese government bonds were up on Friday, with the ten-year governmet bond 3.5 basis points higher to 1.855 percent, but over the week yields on the ten-year bond dropped 4.5 basis points.

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