Bonds round-up: Treasuries slump as equities rally
US treasury notes fell sharply today as investors switched hurriedly to equities in the wake of the Abu Dhabi Investment Authority's decision to buy a 4.9% stake in Citigroup for $7.5bn.
A report indicating that US home prices fell in the third quarter by the largest amount in almost twenty years did little to deter the switch from government bonds to equities, while a bigger than expected fall in The Conference Board's consumer confidence index in November also got overlooked.
The slide in bond prices follows a sharp rise in late trading yesterday which substantially reduced yields on two year and ten year Treasury notes. Yields have recovered somewhat, with the yield on the 10-year Treasury note almost 10 basis points higher on the day at 3.94%, while the 2-year note's yield jumped 14 basis points to 3.03%.
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In the UK, gilts were little changed after publication of the minutes of Monday's meeting between of a meeting the gilt-edged market makers and the Debt Management Office, which showed a majority of market makers in favour of a new five-year gilt in the first quarter of 2008.
In Europe, the yield on the 10-year bund eased 1 basis point to 4.01%, despite the index of German business confidence rising unexpectedly in November which showed manufacturing industry shrugging off the effects of a strong euro.
