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Bonds little changed amid uncertain data

Date: Wednesday 17 Feb 2010

There was no shortage of economic news for bond investors to digest, but the data was mixed and gilt prices failed to budge.

Unemployment in the UK fell by 3,000 to 2.46m in the three months to December, figures from the Office of National Statistics (ONS) show.

However, the number of people claiming jobseekers allowance rose by 23,500 to 1.64m in January, against expectations of a fall of about 10,000.

Meanwhile, at the Bank of England, all nine members of the Monetary Policy Committee (MPC) voted not to inject more money into the economy, minutes from its latest meeting show.

The MPC opted not to increase the £200bn quantitative easing (QE) programme while keeping interest rates at 0.5% at their meeting held on February 3 and 4. The minutes say the decision to keep QE at £200bn was ‘finely balanced’.

With the economic data failing to give any clear signals over prospects for economic recovery, the yield on a 10-year gilt was flat at 4.03%.

US treasuries fell back a little after new home construction jumped 2.8% in January to a bigger than expected annual rate of 591,000, according to the Commerce Department.

The yield on a 10-year note rose by three basis points to 3.68%.

Mainland European bonds gained slightly, with the yield on Germany’s benchmark 10-year bund falling by one basis point to 3.19%.

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