Bonds round-up: Bonds retreat as calm returns
Bonds fell back as yesterday's panic over Bear Stearns gave way to a more measured assessment of prospects for US institutions and the economy.
In the US, two-year note yields rose 13 basis points to 1.47% while benchmark ten-year treasury yields added 8 basis points to 3.39%.
Figures from Goldman Sachs and Lehman Brothers beat estimates and sparked a surge in equity markets worldwide pulling money away from bond markets, even though economists expect the Fed will cut interest rates by 1 percentage point tonight.
A report that the amount of capital mortgage asset groups Fannie Mae and Freddie Mac are required to hold may be lowered also bolstered confidence.
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Bonds in Europe followed the US trend. European bonds fell, with two-year bund yields rising from yesterday's two-year lows by 12 basis points to 3.07%. Te-year benchmark bunds rose by 5 basis points to 3.74%.
Gilts also weakened as UK inflation rose in February at its fastest pace since May last year as energy companies increased gas and electricity prices.
A report from the Office for National Statistics showed annual CPI inflation running at 2.5% last month, more than the 2.2% seen in January, but in line with economists' expectations.
It was the fifth month in a row that inflation has been above the government's 2% target, which gives the Bank of England a headache as it looks to cut interest rates but avoid fuelling inflation. Prices were up 0.7% on the month, the biggest rise since May 2001.
