Interest rate rise sees US bonds down on yields

Yields fell and prices rose on US Treasury bonds on Tuesday after the Federal Reserve took interest rates up another quarter of a percentage point to 3.5 percent.

The 10-year Treasury bond lost 2.4 basis points to yield 4.402 percent, while the 2-year bond fell 3.4 basis points to a yield of 4.128 percent.

In the UK, gilts saw yields rise on a lower trade deficit in June and despite indications that retail sales were falling further. Ahead of the Bank of England report on inflation, due Wednesday, 10-year gilts were up 0.6 basis points to yield 4.399 percent, while 2-year gilts also gained 0.6 basis points to yield 4.233 percent.

Yields were up and prices down in the eurozone as well. The 10-year Bund gained 0.6 basis points to yield 3.375 percent, while the 2-year Schatz added 1.7 basis points to a yield of 2.346 percent. One analyst said that while bond prices were not collapsing, they were slowly trending downward.

In Japan, meanwhile, prices were down in response to a rise in prices for equities and 10-year government bond yields rose to a four-month high before declining slightly to end the session yielding 1.410 percent.

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