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Bonds round-up: Mixed day for bonds as US mortgage worries mount

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Date: Thursday 10 Jul 2008

LONDON (ShareCast) - Comments from Federal Reserve chief Ben Bernanke and St Louis Federal Reserve President William Poole meant a mixed day for both US bonds and equities.

Bernanke said the financial crisis is "ongoing" and wants more regulation over securities firms. Poole , meanwhile, hinted the government may have to step in and rescue mortgage financiers Freddie Mac and Fannie Mae, where both share prices fell by over 20% of fears that neither will be able to raise enough capital to cover shortfalls in their massive mortgage books.

Benchmark 10-year treasury note yields rose 1 basis point to 3.82%. The two-year note yield rose two points at 3.41%.

European government notes rose as the comments by Poole over Freddie Mac and Fannie Mae encouraged some switching into perceived safe havens. Two year bunds fell back to 4.4%.

In the UK more depressing housing data and the decision by the Bank of England to hold interest rates at 5%. Benchmark ten-year gilts fell by more than 2 basis points to 4.86^%, while short gilts shed four points.



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