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Bonds round-up: Jobless claims rise sparks Treasuries purchases

Date: Thursday 25 Feb 2010

Bonds round-up: Jobless claims rise sparks Treasuries purchases

US Treasury bonds are on the rise following disappointing unemployment news in the US.

Initial jobless claims jumped to 496,000 in the week ended 20 February, considerably more than the 460,000 forecast and their highest in more than three months.

Separately, the Commerce Department revealed that durable-goods demand grew 3% in January to a seasonally adjusted $167.91bn, double economists’ forecasts.

Two-year yields fell three basis points to 0.83% and ten-year yields were five basis points lower at 3.64%.

European investors are buying German bunds as worries about the state of the Greek economy persist. Greek debt continues to rise and this could hamper its ability to obtain funding from the European Central Bank. Greek bonds are falling in price as investors look for a safer home for their money.

Moody’s Investors Service warned in the early hours of Thursday morning that any changes in its rating on Greece – currently A2 - depends on its government going ahead with the financial policies it has promised. Rival ratings agency Standard & Poor's said yesterday that it could further downgrade Greece's BBB-plus rating by one or two notches within a month.

The news comes amid rumours that the Greek government plans to raise between €3bn and €5bn from a new 10-year bond next week. It is likely to need to offer a high interest rate on those bonds.

Two-year bund yields are more than four basis points lower at 0.94%, while ten-year yields are three basis points lower.

UK gilt prices are also strong with two-year yields dipping by six basis points to 0.96%, while ten-year yields are four basis points lower at 4.03%.

The balance of retailers in the CBI’s distributive trades survey reporting an increase in sales leapt to +23% year-on-year in February, the highest in 33 months and up from -8% in January. Economists had only expected a read of -1%.

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