Bonds round-up: GDP figures push Treasuries higher

Date: Friday 26 Feb 2010

US Treasury bonds are rising on the back of broadly positive economic news, including higher than expected GDP growth.

Two-year yields fell nearly two basis points to 0.8%, while ten-year yields declined three basis points to 3.6%.

The US government’s revised fourth-quarter gross domestic product growth rate was slightly higher than expected, at an annual rate of 5.9%. Analysts expected an annual rate of 5.7%.

However, the University of Michigan’s confidence index eased a touch to 73.6 from 73.7 last month versus forecasts for a small increase.

Sales of existing homes fell unexpectedly in January, according to the National Association of Realtors.

There was mixed news on the UK economy and all but the shorter-dated gilts are rising in price.

The Office for National Statistics (ONS) revised its initial estimate of a 0.1% increase in GDP in the fourth quarter to a rise of 0.3%, a figure that was better than the consensus forecast among economists of a 0.2% increase.

Third quarter GDP was revised down to show a 0.3% quarterly decline from an initial estimate of a 0.2% fall.

Two-year gilts fell slightly but their yield still dipped one basis point to 0.95%. Ten-year yields were broadly unchanged even though the gilt price rose.

Greece has delayed its expected bond issue, which led to a mixed response from German bunds. Two-year yields are two basis points higher following a dip in the price of two-year bunds. Ten-year bunds are going the other way and tyheir yield fell one basis point to 3.1%.

Eurozone consumer price inflation rose to an 11-month high of 1.0% in January from 0.9% in December.

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