Bonds round-up: European bonds firmer
It was a quiet start to the week for the bond markets with US treasuries little changed in the absence of US economic data, while UK and European stocks moved higher.
Gilts edged higher, with short dated stocks favoured. Investors got over the disappointment of a lack of a base rate cut last week by taking the view that it only delayed the inevitable. The yield on the 2-year gilt fell 5 basis points to 4.22% while the 10-year gilts yield crawled 1 basis point lower to 4.41%. Yields move inversely to prices.
In Europe, government bonds moved higher on expectations that the economic situation will be weak enough to deter the European Central Bank (ECB) from pushing up interest rates next month.
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Rumours of more massive write-downs as the US banks' reporting season gets underway added to the conviction that, barring a substantial upside inflation risk, the ECB will opt for the status quo when it next meets to set rates.
The yield on the 10-year bund fell 4 basis points to 4.05%.
In the US, a better than expected earnings update from IBM steadied the equity market and left government bonds becalmed for want of interest. The yield on the 10-year treasury note was little changed at 3.79%.
