Prices up and yields down on bond markets

Prices increased and yields decreased for government bonds in Japan, Europe, and the United States on Wednesday.

The Japanese 10-year government bond fell 2.5 basis points to a yield of 1.265 percent as news came of only a very small rise in Japanese exports in May.

Yields fell in the eurozone and the UK as well, on continued speculation about possible interest rate cuts.

In afternoon trading in London, the 2-year gilt was down 12 basis points to yield 4.161 percent, and the 10-year gilt fell 9 basis points to yield 4.261 percent.

In the eurozone, the 2-year Schatz lost 4 basis points to yield 2.026 percent, while the 10-year Bund declined by 7 basis points to yield 3.147 percent.

US Treasury bonds saw yields fall in late morning trading in New York on Wednesday as speculation about possible interest rate cuts in Europe saw more of a demand for US debt.

Another factor were rising oil prices, which were seen as a possible damper on economic growth, a circumstance which would send bond prices higher.

A third reason for Wednesday’s price gains may have been a prediction by one fund manager that the US Federal Reserve might halt their program of interest rate rises when the rate reaches 3.5 percent, earlier than some analysts expect.

The 10-year Treasury bond fell 5 basis points to yield 3.994 percent. The 2-year bond reached a yield of 3.651 percent while the 10-year Treasury yielded 4.286 percent.

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