Bonds round-up: Profit takers move in
Profit taking sets in today after yesterday's strong gains that were sparked by the unexpectedly large fall in the Institute for Supply Management's measurement of service sector activity.
In the UK, gilts ignored a gloomy report from Nationwide which revealed that UK consumer confidence dropped to its lowest since figures began last month as the prospect of a recession starts to unnerve the public.
Good news on the inflation front was also shrugged off, as the price of goods fell in the UK during January for the first time in six months, but showed an increase on an annual basis, the British Retail Consortium revealed Wednesday.
The business lobby's most recent survey showed shop prices dropped 0.5% from December when prices rose 0.1%.
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The yield on the benchmark 10-year gilt rose 4 basis points to 4.45%, mirroring the rise on the benchmark 10-year treasury note, which also rose 4 basis points, to 3.61%.
Yields on 10-year US treasuries are close to their lowest point in 5 years and there are fears that this will depress demand for the forthcoming $13bn auction.
Treasury prices fell back today as worker productivity in the US grew faster than expected in the fourth quarter, as companies cut back on the number of hours worked by employees. Productivity rose at an annual rate of 1.8% after rising 6% in the third quarter. Economists had expected a fourth quarter rise of 0.5%.
In Europe, government bonds also retreated, in the absence of any new economic data to influence prices. The yield on the 10-year benchmark bund rose 5 basis points to 3.9%.
