Finance Markets

April 25, 2006

Bond yields up

Filed under: Bonds, Economy, US, Europe, UK, Japan

New data on inflation and business confidence out of Germany sent government bond yields in the Eurozone higher on Tuesday. Energy prices on the rise and strong business activity sent inflation in Germany up by 0.5 percent in April, which was considered to be an indication that inflation in the rest of the region might also be up. Higher inflation is expected to spur the European Central Bank to raise interest rates to 2.5 percent soon. Additionally, the IFO business confidence index in Germany was up to 105.9, from 105.4 last month. The index had been expected to decline to 104.8.

In late afternoon trade, the ten-year Bund had added 6.3 basis points to a yield of 3.989 percent, while the two-year Schatz was yielding 3.371 percent, a gain of 6.2 basis points.

Yields on US Treasury bonds were also up on the day after the Conference Board reported consumer confidence in the United States at its highest level in four years in April, with its consumer confidence index at 109.6 in April, up from 107.2 in March. April’s index level had been expected to decline. In addition, existing home sales in the US were up 0.3 percent tin March against in expected drop.

At late morning in New York, ten-year Treasury bonds were yielding 5.079 percent, in increase of 9.4 basis points. Two-year bonds were up 6.9 basis points to a yield of 4.954 percent.

In the UK, a new sale of index-linked bonds drew orders of only 1.32 times the available amount, much less than expected. Yields on the ten-year gilt were at 4.633 percent, a gain of 4.6 basis points.

Yields were also higher on longer-dated Japanese government bonds on demand for a new auction of 20-year paper that was less than expected. Yields on thirty-year bonds added 3.5 basis points to 2.485 percent, while ten-year yields were at 1.905 percent, up 2 basis points.

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April 18, 2006

UK, Eurozone bond prices up

Filed under: Bonds, Economy, Europe, UK

Prices on government bonds in the Eurozone and the UK were up and yields fell on Tuesday. Investors worried about how rising oil prices will affect growth of the world economy as US crude prices hit new record highs. European bonds also benefited from Monday’s higher prices on US Treasury bonds. Trade was limited somewhat, however, as traders waited for the release of the minutes from the most recent meeting of the US Federal Reserve, hoping that there will be some clue as to what the Fed intends to do about interest rates in the next few months.

At late morning, yields on the two-year Schatz had fallen 1.1 basis points to 3.307 percent. The ten-year Bund dropped 2.7 basis points to a yield of 3.924 percent.

In the UK, new data on house prices from the Royal Institution of Chartered Surveyors helped gilt prices. The monthly index dropped to +13 in March, from a revised figure of +16 in February.

Two-year gilt yields were down 1.2 basis points to 4.516 percent, while ten-year gilt yields were down 1.3 basis points to 4.513 percent.

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April 10, 2006

US bond yields down

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields on US Treasury bonds were down on Monday as investors wait for new economic data scheduled for release later in the week. Also helping bond prices were comments by Federal Reserve governor Susan Bies, who implied that further hikes in the interest rate are not necessarily a given. Most analysts, however, still believe that rate hikes will come in May and possibly in June.

After reaching a yield of 4.994 percent on Friday, ten-year bond yields were down 2.5 basis points to 4.961 percent during the day Monday. Two-year yields were down 1.6 basis points to a yield of 4.898 percent.

Yields on government bonds were mixed in the Eurozone as worries about interest rate increases circulated there as well. Late in the day, yields on the two-year Schatz were up 1.4 basis points to 3.273 percent, but ten-year Bund yields were at 3.897, down 0.4 basis points.

In the UK, a sell-off sent yields higher on gilts. The two-year gilt added 2.1 basis points to 4.455 percent, while yields on the ten-year gilt were up 1.7 basis points to 4.437 percent.

The possibility that interest rates in the United States might rise again sent yields on Japanese government bonds higher. Yields on ten-year bonds added 0.5 basis points to 1.875 percent and thirty-year yields gained 3.5 basis points to 21.485 percent.

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April 6, 2006

Rate decisions move bond yields

Filed under: Bonds, Economy

In the Eurozone on Thursday, yields on government bonds were down and prices rose after the president of the European Central Bank made comments to the effect that the Bank has no intention of raising interest rates in May, contrary to the expectations of many analysts. The remarks came after the Bank voted to leave interest rates at their current level of 2.5 percent.

Yields had risen almost 5 basis points to 2.887 percent on ten-year bonds before the rate decision was announced. After the decision and remarks, the yield on the ten-year Bund dropped significantly, although by afternoon it was still up 1.7 basis points to 3.855 percent. Yields on the two-year Schatz were down by 2.3 basis points to 3.274 percent.

The monetary policy committee of the Bank of England also voted on interest rates on Thursday and followed the ECB in keeping rates at their current level of 4.5 percent. The decision was expected by most analysts, who do not expect rates in the UK to begin rising until the second half of next year.

Yields on gilts did not, however, imitate those in the Eurozone. Two-year gilt yields were up 2.1 basis points to 4.431 percent, while ten-year yields added 3.4 basis points to 4.409 percent.

Meanwhile in Japan, prices on government bonds dropped as equities markets hit long term highs. Five-year government bonds yielded 1.350 percent, a gain of 5 basis points, while the ten-year government bond added 2.5 basis points to a yield of 1.860 percent for its highest close in a year and two-thirds.

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April 4, 2006

Bond yields mixed

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields on US Treasury bonds were down on Tuesday on profit-taking and a lack of news to inspire investors. At late morning, yields on ten-year notes had fallen by 0.8 basis points to 4.858 percent, down from 4.909 percent on Monday. Two-year yields were down by 2.1 basis points to 4.833 percent.

In the Eurozone, meanwhile, the yield on the ten-year Bund had risen by 3 basis points to 3.839 percent ahead of a meeting of the European Central Bank on Thursday. The Bank is not expected to raise interest rates at this meeting, but recent strong economic data has analysts convinced that a rate hike could be coming soon, possibly as early as May.

Gilts were mixed in the UK, with yields on longer-dated bonds dropping but yields on shorter-dated paper up. Two-year gilts were yielding 4.471 percent, up 1 basis point. Fifty-year gilts, however, saw yields drop by 1.3 basis points to 3.957 percent.

In Japan, yields on the ten-year government bond dropped 0.5 percent to 1.840 percent on a falling equities market and slow sales of newly-issued notes.

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March 29, 2006

Global bond yields rise

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields on government bonds rose Wednesday after Tuesday’s interest rate hike in the US and on fears that the European Central Bank might soon follow suit after business sentiment in Germany was reported on the rise earlier in the week.

Yields on US Treasury notes were up early and then down later in New York. Two-year bonds hit a five-year high yield of 4.828 percent before dropping 1.2 basis points to 4.795 by the middle of morning trade. Yields on ten-year bonds went to 4.810, their highest level since the middle of 2004 before also dropping 1.2 basis points later on to a yield of 4.782 percent. The early gains in yields came as some traders had expected more of an indication in the comments issued by the Federal Reserve that the rate hikes would come to an end soon.

Comments from the ECB indicating that eurozone interest rates might soon rise sent the two-year Schatz to 3.289 percent, its highest yield since October 2002, early in the day. Even a steadying later left the Schatz with an increase of 0.6 basis points to 3.278 percent. The ten-year Bund gained 1.4 basis points to yield 3.758 in late trade.

Gilt prices in the UK found some help in weaker new data on retail sales and mortgage lending, but yields were still up on the day, with two-year gilts up 1.5 basis points to 4.465 percent. Ten-year gilts gained 0.6 basis points to a yield of 4.376 percent.

Japanese government bonds also saw yields go up. The five-year bond was up 9 basis points to 1.295 percent, while the ten-year bond gained 7.5 basis points to yield 1.775 percent.

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March 22, 2006

Government bond yields mostly lower

Filed under: Bonds, Economy, US, Europe, UK, Japan

Government bond yields were down in the United States and in Europe on Wednesday, while yields on Japanese government bonds were mixed on the day.

In the Eurozone, yields were up directly after hawkish comments from a member of the European Central Bank’s governing council, but later in the day yields on the ten-year Bund were down 1.9 basis points to 3.646 percent on a soft sentiment report from Belgian that some analysts said could be a precursor to a weak Ifo sentiment report from Germany next week.

Release of a new budget in the UK sent yields on both shorter and longer-dated gilts up and then down during the day. The ten-year gilt yields were up to 4.397 percent but were later down by 3 basis points to 4.304 percent. Thirty-year yields dropped from an early yield of 4.127 percent to lose 4.9 basis points to a yield of 4.012 percent later.

Yields on US Treasury notes fell on lower volumes as traders bided their time, waiting for some indications as to what the Federal Reserve will do about interest rates when it meets next week. At late morning in New York, two-year Treasuries had lost 0.9 basis points to 4.734 percent, while ten-year notes had dropped 1.8 basis points to 4.707 percent.

In Japan, yields were mixed in anticipation of eventual interest rate rises by the Bank of Japan. Two-year government bonds gained 2.5 basis points to 0.575 percent, a five-year high, while ten-year bonds were down 0.5 basis points to 1.725 percent.

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March 20, 2006

Bond yields generally lower

Filed under: Bonds, Economy, US, Europe, UK, Japan

Yields on US Treasury notes were down on Monday ahead of comments from US Federal Reserve Chairman Ben Bernanke in front of the Economic Club of New York scheduled for Monday evening. Traders hoped that his remarks might shed some light on what the Fed will do about interest rates at its meeting next week.

By late morning in New York, two-year Treasury yields were down 0.4 basis points to a yield of 4.649 percent, while ten-year notes were yielding 4.646 percent, a loss of 3 basis points.

The US market helped out Eurozone bonds, as the two-year Schatz yielded 3.206 percent, down by 2.6 basis points and the 10-year Bund lost 1.4 basis points to yield 3.662 percent.

In the UK, meanwhile, yields fell ahead of Tuesday’s expected announcement of the Budget as well as worse than predicted data on public finance for February. Two-year gilts had dropped 0.6 basis points to 4.408 percent by late afternoon, while ten-year gilts were down by 0.2 basis points to 4.341 percent.

In Japan, the 10-year government bond closed at a 19-month high yield of 1.730 percent, a gain of 1.5 basis points.

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March 15, 2006

Bond yields up in US, Europe, Japan

Filed under: Bonds, Economy, US, Europe, UK, Japan

Government bond yields were up in the United States, Europe, and Japan on Wednesday, while in the UK yields fell on two-year gilts but rose on ten-year gilts.

In the US, Treasury notes were affected by a report that showed foreign demand weakening, with purchases by foreign investors at a net $4.4 billion in January, substantially lower than the $18.3 billion in Treasury bonds purchased by foreign investors in December. The December number had been the lowest level of foreign participation in six months. Additionally, The New York Federal Reserve’s Empire State index was up to 31.2 in March, after a previous reading of 21, a far larger jump than had been expected.

Meanwhile, the Treasury Department has asked Congress to raise the debt limit, having already reached the current limit. If Congress does not act by Thursday evening, new sales of two-year and five-year notes, expected to be announced next week, could be put off.

At late morning in New York, yields on two-year Treasury bonds were up 2.1 basis points to 4.67 percent, while ten-year bond yields were up 4.7 basis points to a yield of 4.745 percent.

The situation surrounding US Treasury bonds were a drag on prices on Eurozone bonds as well, as were comments by officials of the European Central Bank. Late in the day in Europe, the ten-year Bund was yielding 3.684 percent, up 4.4 basis points, while the two-year Schatz gained 4.8 basis points to a yield of 3.216 percent.

In Japan, yields on ten-year government bonds rose by 4.5 basis points to 1.720 percent, its highest point since August 2004. Five year bonds were up 4 basis points to 1.220 percent and two-year bonds were yielding 0.565 percent, an advance of 3 basis points.

In London, yields on gilts were mixed as weak employment numbers renewed hopes that interest rates might be cut. Two-year gilts yields fell by 0.6 basis points to 4.401 percent, but yields on ten-year gilts advanced by 0.9 basis points to 4.324 percent.

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March 13, 2006

Bond yields fall on interest rate concerns

Filed under: Bonds, Economy, US, Europe, UK, Japan

Government bond prices were mostly lower and yields were higher on Monday in several major nations as traders worried about interest rates that are likely to go up in the near term.

The announcement in Japan on Thursday that the Bank of Japan is abandoning it’s loose monetary policy, coupled with comments from a Bank board member on Monday that were very close to calling for interest rates to begin rising soon, sent yields on government bonds there to five-year highs. Yields on the two-year bond were up 4.5 basis points to 0.515 percent, while the ten-year bond was yielding 1.690 percent, up 3.5 basis points. Yields on the five-year bond were up 7 basis points on the day and up 14.5 basis points since Thursday’s close, to 1.180 percent.

Prices fell on eurozone bonds ahead of a sale of €20 billion in new issues scheduled for later in the week. Late in the day, the two-year Schatz was yielding 3.257 percent, a gain of 7.4 basis points, while the ten-year Bund was up 4.2 basis points to a yield of 3.709 percent.

In the UK, gilt yields were up on diminishing chances that an interest rate cut is forthcoming from the Bank of England’s monetary policy committee and on higher than expected producer price and house price data. Two-year gilts were yielding 4.456 percent, up 4.2 basis points and ten-year gilts were up 0.5 basis points to 4.357 percent.

US Treasury bond yields were mixed on the strength of Friday’s employment data and ahead of the release of several sets of data later in the week. In late-morning trade, two-year bond yields were lower by 0.4 basis points to 4.738 percent, while ten-year bond yields were up 2.2 basis points to 4.783 percent.

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March 7, 2006

US Treasury yields fall

Filed under: Bonds, Economy, US, Europe, UK, Japan

Prices were up and yields fell on US Treasury bonds on Tuesday after four straight days of price declines. Early in the day in New York, yields hit their highest levels in almost two years, with ten-year bonds yielding 4.805 percent and two-year issues at a yield of 4.809 percent. By midday, however, ten-year yields had dropped 1.6 basis points to 4.738 percent. Two-year yields were about the same at 4.775 percent. The price rises came after an attempt to reverse the current yield curve inversion were not successful.

Yields were up in the eurozone and the UK, however. In the eurozone, the two-year Schatz was at it’s highest yield in over three years, rising 13.1 basis points to 3.124. A possible trigger for the large rise in yields was a sale of up to €9 billion in new two-year notes; at such a time, dealers try to push yields as high as possible in order to get good deals on the new bonds. The ten-year Bund also saw yields rise, but at a more modest 1.7 basis points to 3.608 percent.

In the UK, better retail sales figures from February all but put an end to any hope of an interest rate decrease from the Bank of England’s monetary policy committee when it meets this Thursday. This sent yields on the two-year gilt up by 1.3 basis points to 4.412 percent. Ten-year yields rose 1.4 basis points to 4.271 percent.

Meanwhile, yields on Japanese government bonds have gone up due to growing speculation that the Bank of Japan will end its loose monetary policy when it meets later in the week, or at least that it will announce now that the policy will end in April. The ten-year Japanese bond saw yields rise 1.5 basis points to 1.645 percent.

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February 28, 2006

Bond market yields down

Filed under: Bonds, Economy, US, Europe, Asia, UK, Japan

Yields were down and prices were up on US Treasury bonds on Tuesday as investors reacted to lower consumer confidence, purchasing, and existing home sales data. At late morning, the two-year treasury was yielding 4.668 percent, 5.1 basis points lower, while the 10-year bonds were down 3.7 basis points to 4.557 percent.

European bond yields were lower as well as the new data out of the United States spurred month-end buying in the eurozone despite European consumer confidence data that was stronger than had been expected. The two-year Schatz saw yields decline by 2.3 basis points to 2.991 percent, while the 10-year Bund dropped 4.4 basis points to 3.478 percent late in the day.

In the UK, new economic data showing lower housing prices, slower retail sales, and falling consumer confidence in January all combined to send bond yields lower there. The two-year and ten-year gilts both dropped 3.3 basis points, with the two-year gilt yielding 4.303 percent and the ten-year gilt at a yield of 4.182 percent respectively.

Meanwhile, yields of Japanese government bonds also declined, with the two-year bond down 0.5 basis points to 0.465 percent. This decline came despite the fact that yields on the two-year bond has more than doubled in a month.

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February 24, 2006

European bond markets await eurozone rate decision

Filed under: Bonds, Economy, Europe, UK, Japan

Prices on government bonds in the UK and in Europe were mixed but mostly down and yields were generally up on Friday due to worries about rises in interest rates and other economic news.

In the eurozone, investors seemed to be waiting to see whether the European Central Bank will raise interest rates a quarter of a point as expected before committing themselves. In addition, bond prices were also still being affected by Thursday’s Ifo survey, which showed business sentiment in Germany at a 14-year peak.

At midday, yields on the two-year Schatz were down, but only by 0.7 basis points to 2.971 percent, while the ten-year Bund saw yields up by 0.4 basis points to 3.484 percent.

In the UK, gross domestic product data was more positive than had been expected, causing expectations of an interest-rate cut by the Bank of England in the near term to dwindle. GDP growth in the fourth quarter was at 0.6 percent and year-on-year growth was revised up from 1.7 percent to 1.8 percent.

Two-year gilts were yielding 4.300 percent, a rise of 2.1 percent. Ten-year gilts added 1.1 basis point to yield 4.144 percent.

Meanwhile, in Japan, the ten-year government bond gained 4 basis points after a rise on Thursday as prices fell further in reaction to comments by the governor of the Bank of Japan that seemed to imply he hopes to change Japan’s relaxed monetary policy as soon as possible.

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February 22, 2006

Bond yields up in London, eurozone

Filed under: Bonds, Economy, Europe, UK, Japan

Following the release Wednesday of the minutes from the most recent meeting of the monetary policy committee of the Bank of England, which revealed that only one committee member voted to cut interest rates, gilt yields rose and prices fell as traders lost hope that rates will decline any time in the near term. Speculation before release of the minutes had been that at least two members had voted in favor of cutting rates.

Still, some analysts believe that interest rate cuts may still come later in the year, possibly beginning in May, if the economy does not live up to the Bank’s hopes and pressures leading to inflation begin to ease.

In late morning trade on Wednesday, two-year gilt were yielding 4.260 percent, a gain of 3.5 basis points, while ten-year gilts gained 0.2 basis points to a yield of 4.129 percent.

Prices were down and yields up in the eurozone as well on the news that the French business climate was better than expected and investors took little notice of the release Tuesday of the minutes from the most recent meeting of the US Federal Reserve. Yields on the two-year Schatz were up 3 basis points to 2.938 percent and the ten-year Bund gained 2.9 basis points to a yield of 3.458 percent.

Yields were down, however, on the two-year Japanese government bonds, even while holding steady on the Asian nation’s five-year and ten-year bonds. Yields on the two-year bond were down 1 basis point to 0.390 percent, while yields on the five-year stood at 0.975 percent and the ten-year bond was yielding 1.520 percent.

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February 20, 2006

Eurozone government bonds up, gilts mixed

Filed under: Bonds, Economy, Europe, UK, Japan

Prices on government bonds were up in the eurozone and in Japan on Monday, while they were mixed in London.

In the eurozone, prices were up and yields down, continuing a rally that began last week. This was true even though new data showed that producer prices were up by 1.2 percent in Germany in January, equal to a 5.6 percent annual rise, the highest in over ten years.

In afternoon trade, the two-year Schatz was yielding 2.879 percent, down 1.1 basis points, while the ten-year Bund was 1.6 basis points lower at a yield of 3.437 percent. Trade was light, at least partially due to the closure of US markets for the Presidents Day holiday.

In Japan, yields on the ten-year government bond fell 0.5 basis points to 1.510 percent as Japanese stocks saw another decline on the day. The ten-year bond actually was down to a one-month low yield of 1.5 percent. Higher bond prices were seen as supported by strength in the US government bond market on Friday.

Meanwhile in London, housing data that showed average asking prices on property in the UK were up 2.7 percent in February, the biggest jump in two years, had a mixed effect on gilts. The two-year gilt saw yields up 1.8 basis points to 4.223 percent, but ten-year yields were down 1.3 basis points to 4.116 percent.

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February 16, 2006

US bond yields rise on strong data

Filed under: Bonds, Economy, US, Europe, UK, Japan

US Treasury bonds traded very close to previous levels on Thursday as investors had several items of economic data to take into consideration while making buy and sell decisions.

New housing starts in the US were reported up in January and a report from the Federal Reserve Bank in Philadelphia showed a very strong increase in its February activity index. Meanwhile, new Fed chairman Ben Bernanke continued his testimony before Congress. Yesterday’s comments by Mr. Bernanke included his opinion that the inversion of the Treasury yield curve did not imply anything negative for the overall economic outlook in the US.

Immediately after the release of the Philadelphia Fed data, two-year bond yields had advanced by 0.3 basis points to 4.672 percent and ten-year yields were up 0.2 basis points to 4.602 percent.

In the UK, meanwhile, gilt yields fell on data, including lower-than-expected retail sales in January, that seemed to encourage the case for interest rate cuts by the Bank of England. One analyst said that the talk of a recovery in retail sales prompted by increased in November and December were premature.

Ten-year gilt yields dropped 1.8 basis points to 4.175 percent, while yields on two-year gilts dropped even further, by 3.2 basis points to 4.218 percent.

Yields in the Eurozone were mixed as France and Spain held new bond sales and an official of the European Central Bank issued hawkish comments. Yields on the ten-year Bund were up 2.3 basis points to 3.511 percent, but the two-year Schatz saw yields drop 0.6 basis points to 2.931 percent.

Elsewhere, the Japanese 10-year government bond was yielding 1.545 percent, a decline of 2 basis points.

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February 10, 2006

Bonds mixed in Europe after US 30-year sale

Filed under: Bonds, Economy, US, Europe, UK

The bond markets in the UK and Europe saw mixed results on Friday in the wake of a more-than-successful sale of 30-year long bonds in the US on Thursday. Meanwhile, yields on Japan’s 10-year government bond were up in anticipation of changes in the Bank of Japan’s monetary policy.

The U.S. Treasury received bids for 2.05 times the $14 billion in new 30-year bonds being offered for sale on Thursday, where indirect bidders, which are an indication of demand from foreign investors and “real” money fund managers, amounted to a very strong 65.4 percent of the bids.

News of the U.S. sale’s success, along with data showing that the French economy grew less than had been expected during the fourth quarter of 2005, brought mixed results in the European bond market. Yields on the two-year Schatz fell 1.9 basis points to 2.910 percent, while 10-year Bund yields gained 1 basis point to 3.464 percent.

Profit taking sent yields on the two-year gilt in the UK up 3.2 basis points to 4.286 percent. The 10-year gilt held its ground at a yield of 4.162 percent.

In Japan, the 10-year government bond saw yields up 4 basis points to 1.595 percent, while the 5-year government bond yielded 1.025 percent, a jump of 7.5 basis points, and the 2-year government bond saw yields rise 4.5 basis points to 0.365 percent, its highest in 5 years.

Most of the Japanese yield gains had to do with investors’ responses to the Bank of Japan governor’s comments concerning his belief that the consumer price index would rise higher than January’s level, an indication of the end of deflation and that the Bank could soon end its loose monetary policy. Most analysts believe that this change could come sometime in the spring.

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August 26, 2005

US bond market worries about recession

Filed under: Bonds, US
US bond market worries about recession

Comments made by outgoing Federal Reserve chairman Alan Greenspan at a conference in Wyoming on Friday sent prices down and yields up on US Treasury bonds.

Mr. Greenspan, in discussing the values currently assigned to real property, made remarks that could be construed as indicating that the Fed will follow a policy of continuing to increase interest rates in order to control prices in the housing market.

As a result, yields on the 2-year Treasury bond were up by nearly 6 basis points to 4.06 percent on Friday afternoon, while 10-year bonds gained 2 basis points to yield 4.18 percent.

The difference in yields between 2-year and 10-year US Treasury bonds is at its lowest in over four years, at only 12 basis points on Thursday in New York.

Last year at this time the difference sat at 180 basis points.

This circumstances has come about because yields have not followed tradition and risen along with hikes in short-term interest rates that have been initiated by the Federal Reserve over the past fourteen months.

With yields on the two bonds so close, analysts are watching for an inversion, a circumstance where 2-year yields go higher than 10-year yields.

The importance of this is that six of the seven times this has happened since the 1960s, the inversion has been followed by a recession.

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August 24, 2005

$20 billion auction in 2 year bonds “healthy”

Filed under: Bonds, US
$20 billion auction in 2 year bonds "healthy"

An auction of $20 billion in 2-year US Treasury bonds on Wednesday was called “healthy”, with a 44 percent indirect bid, something that indicates the interest of foreign and institutional bidders, but the sales was still a victim of the end-of the summer doldrums in the markets.

Otherwise, US economic data was mixed with reports of record sales of new homes in July but a drop in orders for durable goods.

During afternoon trading in New York, 2-year Treasury bonds had declined by 0.4 basis points to yield 3.984 percent, while the 10-year bond lost 1.3 basis points to a yield of 4.171 percent.

Yields were also down on UK gilts on revived talk that the Bank of England might cut interest rates again before the end of the year.

The basis of this speculation was a report showing manufacturing orders down to their lowest level since October 2003, putting in question the idea that the manufacturing sector could help the growth of the GDP in the UK in the third quarter.

The 2-year gilt yielded 4.173, down 0.3 basis points, while the 10-year gilt dropped 1.1 basis points to 4.235 percent.

Prices were down and yields up on eurozone government bonds after the release of strong data on industrial orders in the region.

The 2-year Schatz gained 2.4 basis points to yield 2.216 percent and the 10-year Bund added 1 basis point to yield 3.171 percent.

Meanwhile, yields on 10-year Japanese government bonds fell by 3.5 basis points to 1.415 percent.

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August 23, 2005

10-year Treasury bond loses 3.1 basis points

Filed under: Bonds, Countries & Regions, US, Europe, UK, Japan
10-year Treasury bond loses 3.1 basis points

Prices on US Treasury bonds were up and yields fell to their lowest levels in a month on Tuesday, mostly on figures showing that the sales of existing homes had fallen by 2.7 percent in July.

In midday trading in New York, the 10-year Treasury bond had lost 3.1 basis points to a yield of 4.176 percent, while the 2-year bond dropped 3 basis points to yield 3.988 percent.

In Europe, meanwhile, yields on eurozone government bonds were up with the news that the
ZEW index of investor confidence had risen from 37 in July to 50 in August.

Yields on the 2-year Schatz gained 4 basis points to 2.210 percent as yields on the 10-year Bund rose by 0.8 basis points to 3.171 percent.

Still, some analysts wanted to wait for the numbers from the Ifo business sentiment index, due out on Wednesday, before committing to confidence that the eurozone economy is getting better.

Yields on UK gilts were down after an initial rise, as investors anticipated release of the CBI industrial trends survey.

The 2-year gilt fell fractionally to a yield of 4.194 percent, while the 10-year gilt lost 1.9 basis points to yield 4.245 percent.

In Japan, yields on the 10-year government bond lost 2 basis points to 1.450 percent.

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