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Bonds: US Treasury yields get off the floor

Date: Thursday 24 May 2012

Bonds: US Treasury yields get off the floor

Having approached near-record lows this week, US Treasury yields picked up as prices pulled back following some solid US economic data.

Durable goods orders grew by 0.2% month-on-month in April, as expected. So-called core capital goods orders, on the other hand, contracted at a 1.9% month-on-month pace. The latter made for the first back-to-back fall in a year. However, the previous month’s change was revised to -2.2% from the preliminary reading of -3.6%.

Elsewhere, initial weekly unemployment claims fell by 2,000 to 370,000, in line with forecasts.

Over the lunchtime trading session, the benchmark 10-year Treasury was down 5/16 of a dollar, with the yield up 3 basis points.

In Europe, there was little change in government bond prices in the wake of Wednesday night's summit meeting of European leaders, which produced little in the way of progress but which may, as a result, have forced the European Central Bank (ECB) to contemplate stepping in if things continue to deteriorate in the Eurozone.

“If the crisis threatens to escalate again, like in the autumn of last year, the ECB will probably follow up with more three-year tenders even if it rejects this at present,” reckons German banking titan, Commerzbank.

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