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Wednesday 17th of October 2007

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Bonds prices lower in US, Eurozone


by Elaine Frei
October 13, 2006

Prices on US Treasury bonds were down and yields rose on Friday on strong new sales data and figures showing consumer sentiment up more than had been expected in the US in October. Meanwhile, comments from Federal Reserve officials signaled worries about inflation and growth that seemed to indicate that there would be no interest rate cuts coming anytime soon.

By mid-morning in New York on Friday, the two-year Treasury bond was up 3 basis points to 4.87 percent, while ten-year issues had also gained 3 basis points to a yield of 4.81 percent. The two-year bond had started the week yielding 4.75 percent, while ten-year bonds began the week at a yield of 4.71 percent.

In the Eurozone, the October bulletin from the European Central Bank indicated that it could be near the end of its series of interest rate hikes, even though it also said that more hikes could be needed if the region’s economy continued to grow as it is now expected to do.

The two-year Schatz was up by 1.3 basis points to 3.67 percent after starting the week yielding 3.60 percent. The ten-year Bund added 1.5 basis points to a yield of 3.83 percent, from a starting yield of 3.77 percent on Monday.

Meanwhile, in the UK, longer-dated gilts saw prices decline as most analysts said they expect interest rates there to rise again in November.



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