Bonds round-up: Weak house price data boosts gilts
Government bonds regained their equilibrium today following yesterday's massive losses that were inspired by news of concerted action by central banks to avert a liquidity crisis.
UK and European government bonds were higher, though off the top, while US Treasuries retreated in the wake of strong US retail sales figures.
The US retail sales index rose 1.2% in November, following a 0.2% rise in October. The November rise was twice as high as forecast.
Meanwhile, the upward trend in energy prices drove producer prices north in November. Wholesale prices rose by a higher than expected 3.2% following a 0.1% jump in October.
Government bonds reacted to the data by heading lower. The yield on the 10-year Treasury note rose 4 basis points to 4.13%.
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In the UK, gilt prices were bolstered by weak house price trends, as reported by the Royal Institute of Chartered Surveyors' report, and a slowdown in the growth in manufacturing orders, according to the Confederation of British Industry's latest monthly trends survey. The yield on the 10-year gilt fell 4 basis points to 4.77%.
The RICS report confirmed recent evidence of a cooling off of house prices in the UK, with 40.6% of its members reporting a fall in house prices in November - the highest level since May 2005.
Meanwhile the CBI monthly trends survey showed a net 2% of manufacturers reported a rise in orders last month, down from +8% in October. Observers had been expecting a November read of +0.4%.
European bonds saw gains trimmed following the release of the US retail sales data. The yield on the 10-year bund eased 2 basis points to 4.29%.
