Bonds round up: Bond prices soar

Date: Tuesday 12 Jan 2010

Weak global stock markets are providing a boost to bond markets.

News that China is trying to hold back its growth rate plus weak commodity markets are hitting the global stock markets.

US Treasury bonds have risen strongly particularly at the longer-dated end. Two-year yields are down three basis points at 0.9%, while ten-year yields are nearly nine basis points lower at 3.73%.

RBS Securities Inc says that it is a buying signal if the ten-year yield closes below 3.768%.

The US government is preparing to sell $40bn of three-year notes.

UK gilts and German bunds are following the same road as US Treasury bonds but the rise is not as sharp.

Two-year gilt yields are one and a half basis points lower at 1.19%, while ten-year gilt yields are five basis points softer at 3.93%.

Two-year bund yields are one basis point lower at 1.21%, while ten-year bund yields are down four basis points at 3.31%.

Gilts are rising even though the British Chambers of Commerce is urging the Bank of England to stop purchasing gilts after the current tranche of buying is completed.

Britain’s goods trade deficit with the rest of the world came to £6.8bn in November from a revised £7bn in October, according to the Office for National Statistics. Economists had forecast a £7bn deficit.

The main factor behind the smaller trade deficit is that exports rose 0.1%, driven by sales of consumer goods and chemicals, while imports fell 0.8% over the month.

The British Retail Consortium says that the UK retail sector had its best Christmas for eight years. Like-for-like sales rose 4.2% by value in December, a result described by BRC director general Stephen Robertson as "stronger figures than we dared hope for".

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