Positive eurozone news helps bond yields

In the eurozone on Tuesday, positive news on German and eurozone retail sales trumped recent news of more negative economic indicators to send bond prices down and yields up.

The 2-year Schatz was up 5.2 basis points to yield 2.158 percent, while the 10-year Bund gained 4.5 basis points to 3.212 percent.

In the UK, the 2-year gilt rose 5.9 basis points to 4.147 percent and the 10-year gilt gained 4.6 basis points to yield 4.263 percent as expectations persist that UK interest rates will remain at 4.75 percent this month but will be cut in August.

In New York on Tuesday, meanwhile, US Treasury bonds saw a sell-off in shorter-dated issues and more investors buying longer-dated notes by late in the day, sending prices down and yields up.

The 2-year bond was up 2.9 basis points to yield 3.786 percent, the 10-year bond gained 5.6 basis points to 4.111 percent, and the 10-year bond advanced 6.3 basis points to a yield of 4.362 percent.

Analysts surmised that many investors were waiting for the release of monthly US employment data due on Friday as well as for Federal Reserve chairman Alan Greenspan’s twice-yearly Congressional testimony later in the month to see if his comments will shine any more light on the future direction of interest rates.

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