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Bonds round-up: Bonds in equities' shadow

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Date: Monday 18 Feb 2008

LONDON (ShareCast) - With the US markets shut today there was little economic data to drive bond prices, with investors’ preference for equities the deciding factor in pushing bonds lower.

In the UK, gilts fell back following the news that the government is going to temporarily nationalise troubled mortgage lender Northern Rock. Although the market is assuming that this has put to bed the idea of the government converting its loans to the bank into bonds and thus has potentially freed up a lot of money that might therefore find its way into government debt, prices still declined.

Indications from property web site Rightmove that the UK housing market might be picking up also did nothing to improve sentiment. The yield on the benchmark 10-year gilt rose 4 basis points to 4.64%.

In mainland Europe government bonds fell as the European Central Bank continues to maintain its hard-line stance on interest rates. The yield on the benchmark 10-year bund rose 6 basis points to 3.96%.