Government bonds in general sell-off

Sell-offs were a general theme in government bond markets on Wednesday. In Japan, prices were down and yields up by 0.5 basis points to 1.240 percent in anticipation of an auction of 20-year bonds.

In the eurozone, the 10-year Bund gained 9.1 basis points to yield 4.125 percent after comments by the head of the European Central Bank that implied there will be no cut in eurozone interest rates in the near future. Additionally, bond sales in Poland, Germany, and Italy only received a lukewarm response.

In the UK, the 10-year gilt was yielding 4.407 percent, a gain of 8.3 basis points.

Sell-offs continued in the US as well, as the 10-year Treasury rose 1.2 basis points to yield 4.125 percent at mid-day in New York. This was despite the second day in a row of inflation figures that would seem to benefit bonds. A decline in the foreign purchase of Treasury bonds brought concerns over future demand.

But consumer price inflation was down 0.1 percent in May as energy prices fell, although excluding energy and food prices from the figures results in a rise in inflation of 0.1 percent.

One analyst remarked that the bond market has begun to ignore good news and embrace bad news.

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