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Bonds round-up: Interest rates recover

Date: Monday 08 Feb 2010

Bonds round-up: Interest rates recover

US Treasury bonds are falling in price despite continued concerns about European economies. UK gilts and German bunds are following them lower.

Greek unions say they will go ahead with a planned 24-hour walk-out on Wednesday in protest over the government’s austerity measures. A general strike could take place later this month. The walkouts come after Greece announced plans to cut its budget deficit below 3% of GDP by the end of 2012.

This will create further uncertainty about the Greek economy, which is one of many eurozone economies coming under scrutiny.

Two-year Trasury bond yields are two basis points ahead at 0.79% and ten-year yields are three basis points higher at 3.6%.

Two-year German bund yields are one basis point higher at 1% and ten-year yields are three basis points ahead at 3.15%.

UK gilts are falling even more sharply as there are concerns about UK banks’ ability to lend money. Two-year yields are six basis points higher at 1.2%, while ten-year yields are nearly seven basis points up at 3.95%.

Britain's banks and building societies have warned that they will have to cut mortgage lending and raise rates if they would have to repay the £300bn they have received in taxpayer support since 2008.

The Council of Mortgage Lenders has set out its case for continuing government support for the Special Liquidity Scheme and the Credit Guarantee Scheme. The schemes are due to be paid by 2012 and 2014 respectively.

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