NEW! Investment Companies Centre

Bonds round-up: Bonds rally as shares slump

News for Spread Betters

PreviousPrevious
NextNext

There's a new Investor Edition of CMC Markets' spread betting platform... and it's exclusive to DigitalLook.com users...

Get full details about Marketmaker:Investor Edition here. Advertisement

Date: Thursday 26 Jun 2008

LONDON (ShareCast) - Bonds rose sharply as equity investors sought refuge from a hammering for share prices across most markets.

Goldman Sachs sparked a move into bonds with a downgrade of its rival investment banks suggesting they could face a further $8.9bn in bad loans write-offs.

Having been convinced that US interest rates were going up again a few weeks ago traders now suggest that yesterday's decision to keep them on hold at 2% could mean they stay there for a while.

A final revise for US GDP showing growth at an annual rate of 1% in the first quarter coupled with 384,000 dole claimants in the week ended 21 June added to the unease about the US economy.

Two-year treasury note yields tumbled 11 basis points to 2.70%, while benchmark ten-year yields fell by 6 basis points to 4.06%.

European bonds also rose on the prospect of tougher global economic conditions. Two-year bund yields fell 11 basis points to 4.46% with benchmark ten year yields down 9 basis points to 4.52%.

Gilts as rallied as comments from Bank of England governor Mervyn King were interpreted as suggesting interast rates may not rise as quickly as forecast.

The bank governor added he had been surprised by the reaction to recent economic data in the UK, but added he was confident inflation would come back again to the target level.

"I am confident that we will bring inflation back to the target, but I cannot tell you what level of interest rates we will need to set to achieve that," he said.

Two year gilt yields tumbled more than 11 basis points to 5.13% while ten year yields fell to 5%, also more than an eleven basis point fall.


Digital Look have been voted
"Best Research and Information Provider"

4th Floor, Bankside House, 107 Leadenhall Street, London EC3A 4AF.
Registered in England and Wales (registered no. 3678570).