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Bonds round-up: Job figures boost US bond yields

Date: Friday 05 Mar 2010

Bonds round-up: Job figures boost US bond yields

Better than expected jobs figures for February have pushed US Treasury bonds lower.

The figures paint a better picture of the US economy than was expected. Non-farm payrolls fell 36,000 last month, according to the US Labor Department, much less than the 65,000 predicted by economists, although it’s likely February’s snow storms on the East Coast had a big impact.

The unemployment rate, steady at 9.7%, had been expected to hit 9.8%.

Two-year yields are six basis points ahead at 0.91%, while ten-year yields are eight basis points higher at 3.69%.

UK gilts are moving in the opposite direction to US bonds following a further jump in producer price inflation, which reached a 14-month high in February.

The output price index of manufactured products rose 4.1% in the year to February, up from a rise of 3.8% in the year to January and the highest rate since December 2008.

Petroleum products showed a 20% year on year increase while tobacco and alcohol goods rose 3.8%. Electrical and optical goods showed a 5.1% increase over the 12 month period.

The core producer price index, which strips out the effects of food, beverages, tobacco and petroleum, also rose 0.3% in February after climbing 0.4% in January. The annual gain broadened to 2.9%, from 2.6% in January.

However input prices rose at a slightly lower rate, climbing by 6.9% in the year to February, compared with the 7.7% rise seen in January.

Two-year gilts yields are five basis points higher at 1.11%, while ten-year yields are nearly five basis points higher at 4.05%.

The European markets’ hope that yesterday’s successful auction of Greek bonds may signal the end of the crisis in the country for the time being.

German Bunds are falling in price with the two-year yield nearly three basis points higher at 1%, while ten-year yields are nearly four basis points higher at 3.16%.

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