Bonds flat despite cheery jobs data

Date: Wednesday 16 Dec 2009

Better than expected unemployment data in the UK failed to spark a sell-off of gilts.

The number of people claiming unemployment benefit fell for the first time since February 2008 in November amid further signs the UK economy is beginning to recover from the economic downturn.

The claimant count fell by 6,300 to 1.63m during November, figures from the Office of National Statistics (ONS) show. Analysts had expected the rate of increase to moderate to 12,500 more claimants compared with 12,900 the previous month, but were taken by surprise by the fall.

The yield on a 10-year UK gilt fell was flat at 3.89%.

In the US, where traders expect the Federal Reserve to maintain interest rates at their historic low levels later today, bonds edged higher.

The yield on a 10-year treasury was down three basis points at 3.56%.

Mainland European bonds also advanced.

Consumer prices in the eurozone rose by a lower than previously predicted 0.5% year-on-year in November, official figures showed on Wednesday, lessening the likelihood of higher interest rates any time soon.

The yield on Germany’s benchmark 10-year bund climbed by four basis points to 3.2%.

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