Bonds round-up: Inflation surprise perks Treasuries
Inflation issues dominated proceedings in bond markets today with US treasuries turning higher, and European and UK bonds reducing losses, after US consumer prices rose less than expected in April.
The US Consumer Prices index rose 0.2% in April, versus expectations of a 0.3% rise, after rising 0.3% in March. The annual inflation rate stood at 3.9%, as cheaper furniture and accommodation costs defrayed soaring food costs.
The relatively benign trend revived hopes that the Federal Reserve will resume its programme of rate cuts; many pundits had previously been of the opinion that the Fed would call a halt to rate cuts for fear of fanning the flames of inflation.
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The yield on the benchmark 10-year note fell one basis point to 3.90%.
In Europe, inflation trends are causing more alarm, with UK gilts still rattled by yesterday's inflation figures - where higher energy and food costs helped push annual inflation up to 3% in April from 2.5% in March - and European investors concerned at French inflation, which stayed close to a 12-year high in April, at 3.4%, down slightly from 3.5% in March.
The yield on the benchmark 10-year gilt rose 10 basis points to 4.82% while on the 20-year bund it rose 7 basis points to 4.17%.
