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Bonds round-up: Debt crisis boosts bonds

Date: Friday 05 Feb 2010

Bonds round-up: Debt crisis boosts bonds

Investors continue to transfer their cash from shares to bonds as worries about the debt crisis in Europe continue. All the major world bond markets are showing bond price rises.

Higher US Treasury bond prices mean that two-year yields are four basis points lower at 0.76% and ten-year yields are two basis points lower at 3.59%.

Investors were also flocking to German bunds where two-year yields fell below 1% - dropping seven basis points to 0.99%. Ten-year yields fell four basis points to 3.13%.

UK gilt price rises are lagging behind, but two-year yields are still nearly three basis points lower at 1.15% and ten-year yields are down one basis point to 3.89%.

UK producer prices rose more than expected in January and inflationary fears may have held back the improvement in gilts. Output prices rose 0.4% in January compared to December, pushing the annual rate up to 3.8% from 3.5% in December, the highest since December 2008.

The input price index for materials and fuels purchased by manufacturing industry rose 8.4% in the year to January and rose 2.0% between December and January.

US Treasury bonds were also boosted by concerns about unemployment.

In December, 20,000 employees lost their jobs but the unemployment rate fell from 10% to 9.7%, a five-month low. Experts expected it to be the other way round with the number of employees rising and the jobless rate edging up. Fewer people who are still seriously looking for work has helped reduce the unemployment rate.

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