Bonds round-up: Gilts head higher

Date: Thursday 04 Mar 2010

UK gilts are on the rise as the Bank of England leaves interest rates unchanged.

Interest rates are steady at 0.5%. The Bank decided not to extend its QE programme past £200bn last month and has maintained that position today.

House prices fell for the first time in eight months in February. The monthly decline was 1.5% but house prices are still 4.5% higher than one year ago.

Two-year yields are two basis points lower at 1.06%, while ten-year yields are nearly three basis points down at 4.01%.

US Treasury bonds were mixed after the release of strong economic data.

Productivity increased by 6.9% in the fourth quarter, demonstrating that employers are squeezing the most out of employees, while freezing or cutting wages.

First-time unemployment claims fell by 29,000 to 469,000 last week.

Shorter-dated bonds are lower but longer-dated ones are rising in price. The two-year yield is four basis points higher at 0.84% but the ten-year yield is one basis point lower at 3.6%.

German bunds are also mixed with two-year bunds falling and the interest rate rising one basis point to 0.98%. However, most prices are higher and the ten-year yield is nearly two basis points lower at 3.12%.

Gross domestic product across the eurozone grew by 0.1% in the final quarter of 2009, but fell by a seasonally-adjusted 2.1%. Both figures were unrevised from Eurostat's preliminary estimates.

For the full year, eurozone GDP decreased by 4.1% in 2009.

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