Bonds round up: Retail figures push up bonds

Date: Thursday 14 Jan 2010

Poor US retail sales have pushed up US Treasury bond prices.

US retail sales fell unexpectedly in December as cautious Americans scaled back spending over the Christmas period.

Sales from stores were 0.3% lower than in November. Analysts had been expecting a rise of around 0.5%. In November, sales were up by 1.8% from the previous month.

Two-year yields fell four basis points to 0.92%, while ten-year yields were five basis points lower at 3.75%.

There were no surprises from the European Central Bank today as it left interest rates unchanged again.

European Central Bank President Jean-Claude Trichet said unemployment will rise, hampering a recovery for the 16-nation economy. He also said that he would not change policies for any single country. This caused worries about Greece’s credit rating.

German bunds were higher on that news and better than expected European production figures. Two-year yields fell two basis points to 1.17%, while ten-year yields declined by one basis point to 3.29%.

Eurozone industrial production rebounded by a better-than-expected 1.0% in November compared with the previous month, while October's fall was revised to 0.3%.

In contrast, UK gilts fell in price. Two-year yields rose two basis points at 1.24% and ten-year yields were up a similar amount to 3.98%.

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