Prices down and yields up on US Treasury bonds for profit taking

Prices were down and yields up on US Treasury bonds as some investors indulged in profit-taking, and on comments by the head of the Chicago Federal Reserve.

By late morning trading in New York, the yield on the 2-year Treasury bond had gained 2.4 basis points to reach a yield of 4.012 percent, while the 10-year bond remained at a yield of 4.173 percent.

Michael Moscow, who heads the Federal Reserve in Chicago, said that the economy seems to be growing “at or near” its potential, but he warned that higher core inflation rates and rising crude oil prices pose potential risks to the economy’s generally good outlook.

Meanwhile, yields fell on eurozone and UK government bonds. In the UK, reports of a decline in mortgage approvals in the UK added to other signs pointing to slowing growth in the property market as well as concerns about the risks to the global economy posed by rising oil prices led the 2-year gilt to lose 1.9 basis points to yield 4.154 percent. The 10-year gilt dropped 2.4 basis points to 4.210 percent.

In the eurozone, the Ifo business sentiment index showed business confidence deteriorating as the index fell from 95.0 in July to 94.6 in August, when a rise had been expected based on earlier surveys.

This sign that the European economy is still struggling sent yields on the 2-year Schatz down by 1.7 basis points to 2.188 percent, while the 10-year Bund dropped 3.7 basis points to yield 3.135 percent.

In Japan, prices on the 10-year government bond fell slightly, while yields were up by 1 basis point to 1.425 percent.

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