Quiet trading as bond investors wait for economic news

At late morning on Thursday, prices were up on US Treasury bonds on quiet trading in advance of Friday’s release of US economic growth figures.

Analysts expect the annualized GDP rate for the quarter to have grown by 3.4 percent, down from the 3.8 percent of the two previous quarters.

Reports were that investors were buying longer-dated bonds that are less sensitive to interest rates because they believe that benchmark duration, which is a measure of interest rate sensitivity, would go up at the end of July.

The 10-year Treasury was trading at a yield of 4.213 percent by the end of the morning in New York, down by 4.3 basis points.

Yields were up in the eurozone in reaction to signs that the economy is getting better and that inflationary pressures were going up.

This last was indicated by a rise in the M3 money supply indicator, which was up 7.5 percent in July as against an expected rise of 7.1 percent. In addition, German unemployment was down for the fourth month in a row.

The 2-year Schatz yielded 2.236 percent, an advance of 3.9 basis points, while the 10-year Bund gained 1 basis point to yield 3.230 percent.

UK gilts followed the eurozone in seeing yields up. The 2-year gilt gained 1.2 basis points to yield 4.134 percent, and the 10-year gilt was up 0.5 basis points to a yield of 4.303 percent.

In Japan, the 10-year government bond lost 0.5 basis points to yield 1.295 percent, but only after reaching a one-month high yield of 1.315 percent.

Story link: Quiet trading as bond investors wait for economic news