Bonds round-up: US Treasuries rise on sub-prime rumours
Yesterday's decision by the Bank of England to keep interest rates unchanged continues to weigh down gilt prices, but US treasuries are wanted on rumours of more casualties in the financial sector.
In the UK, the yield on the 10-year gilt is up 2 basis points at 4.42% while in Europe, the yield on the 10-year bund is virtually unchanged at 4.09%. The European Central Bank, like its UK counterpart, opted to keep interest rates unchanged yesterday.
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The US equity market has been rattled by rumours that Merrill Lynch will announce $15bn of write-downs when it announces its fourth quarter results next week, and this has encouraged support for government bonds.
Indications from Federal Reserve chairman Ben Bernanke that the Fed would move swiftly to address any deterioration in the US economy also underpinned bond prices. As a result, the yield on the 10-year Treasury note fell 5 basis points to 3.84%.
