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October 20, 2006

European government bond yields rise

Permalink: European government bond yields rise by Elaine Frei

Filed under: Investments, Economy, News

Prices were up and yields lower on US Treasury bonds during the week as investors remained wary ahead of the next meeting of the Federal Reserve, scheduled for next week. Data releases during the week did not help determine the economy’s direction, although most analysts expect the Fed to hold interest rates at 5.25 percent again this month. At midday on Friday the ten-year Treasury bond was 0.4 basis points lower for the day to a yield of 4.786 percent. The ten-year issue had begun the week at 4.796 percent.

In the Eurozone, ten-year Bund yields were 0.2 basis points higher to 3.827 percent late in the session. European bonds were affected by the move on Thursday by two ratings agencies to downgrade Italy’s debt.

The yields on UK gilts were also higher on the day, on the expectation that the Bank of England will raise interest rates at their meeting next month. The two-year gilt was 3.8 basis points higher to a yield of 5.064 percent, while the ten-year gilt gained 2.8 basis points on the session to 4.693 percent. At the beginning of the week the two-year gilt was yielding 5.019 percent, while the ten-year gilt was at 4.642 percent. Friday’s two-year yield was its highest level since July 2002.




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