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Bonds round-up: Recession fears underpin bonds

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Date: Friday 22 Feb 2008

LONDON (ShareCast) - Government bonds close out the week on a firm note, as fears of a US recession linger. The Philadelphia Fed index, released yesterday, reported that regional manufacturing fell to -24.0 from -20.9 in January against expectations of an improvement.

In other economic news yesterday, the January index of leading economic indicators fell for the fourth straight month, down 0.1% as expected.

The yield on the benchmark 10-year treasury note fell 4 basis points to 3.73%.

In Europe, bonds edged higher after euro zone industrial orders fell 3.6% in December from the previous month and rose 2.1% year-on-year.

The yield on the benchmark 10-year bund dipped 2 basis points to 4.67%.

UK gilts underperformed their European counterparts, as yesterday’s announcement of a surprising surge in retail sales in January makes the prospect of a UK interest rate cut less likely. The yield on the benchmark 10-year gilt fell 1 basis point to 4.67%.