Capital markets wait on US treasury rates

Some bond markets seemed to be waiting on Thursday for the US Federal Reserve to issue its decision to raise US interest rates along with a policy statement that could give guidance as to where rates are expected to go in the future.

In other bond markets, prices were higher and yields lower on continuing interest rate speculation in the UK and the eurozone. That speculation continued in the eurozone despite statements by officials of the ECB that continue to reiterate their position that interest rates are “appropriate” at their current 2 percent.

The 2-year Schatz fell by 2.1 basis points to yield 2.207 percent and the 10-year Bund was down 5.5 basis points to a yield of 3.319 percent. In early afternoon trading in London, meanwhile, the 2-year gilt was down 5.4 basis points to yield 4.056 percent, while the 10-year gilt declined by 4.3 basis points to a yield of 4.172 percent.

In longer-dated paper, the 30-year gilt was down by 3.6 basis points to a yield of 4.207 percent, while the 50-year gilt fell 5 basis points to yield 4.122 percent. These yield declines came on slower than expected first-quarter economic growth in which household spending grew by only 0.1 percent while house prices fell by 0.2 percent.

Another reason for the rise of gilt prices was the ongoing speculation that the Bank of England will cut UK interest rates soon. August is the most talked-about time for the move, but some analysts think a cut in rates could come as early as July.

Story link: Capital markets wait on US treasury rates