Gains on treasury bonds continues

An unexpected rise in retail sales in the UK sent yields on gilts up on Thursday. The 2-year gilt yielded 4.372 percent, a rise of 2.4 basis points, while the yields on 20-year gilts rose 2.1 basis points to 4.365.

Yields rose in the eurozone as well, with the 2-year Schatz rising 0.9 basis points to yield 2.244 percent, and the 10-year Bund going up 2.1 basis points to a yield of 3.308 percent. Bond auctions in France and Spain produced good demand.

In the US, however, prices rose on U.S. Treasury bonds while yields fell as news of a smaller number of unemployment claims overcame weaker-than-expected results from the Philadelphia Federal Reserve’s index of business activity to influence investors’ decisions. First-time unemployment filings stood at 321,000, down by 20,000 from the previous week, while the business activity index fell to 7.3 in May. It had been 25.3 in April, a significant drop.

The desire of investors to avoid taking on serious risk was also a factor again. By early afternoon, 2-year Treasury bonds were yielding 3.620 percent and 10-year Treasury bonds were yielding 4.1 percent.

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