Gilt auction attracts buyers

Date: Wednesday 06 Jan 2010

Two year gilts were wanted after an auction of bonds due in 2015 achieved a healthy bid-to-cover ratio of 2.68 as low prices attracted investors.

However, it was a different story for 10-year bonds, with the yield rising by four basis points to 4.05%.

The pound fell against the dollar amid renewed doubts over Gordon Brown’s position as prime minister after two former cabinet ministers call for a secret ballot on his leadership.

Patricia Hewitt, former health secretary, and Geoff Hoon, former transport secretary, sent a letter to all Labour MPs saying there should be a ballot on who leads the labour party into the election, stating that the issue needs to be sorted out "once and for all".

Mainland European bonds were unchanged after industrial new orders in the 16 countries using the euro posted a fall of 2.2% in October after a 1.7% rise the previous month.

The yield on a 10-year bund was unchanged at 3.38%.

US treasuries fell back after figures from payrolls processing firm ADP showed private-sector employment fell by 84,000 in December, the smallest decline in jobs since March 2008.

The 10-year note yield climbed four basis points to 3.8%.

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