Bond yields up in US, UK, Eurozone

Yields on government bonds were up in the United States on Thursday as investors reacted to Wednesday’s decision by the US Federal Reserve to hold interest rates at 5.25 percent for at least another month. At midday in New York, the two-year treasury had added 2.9 basis points to a yield of 4.565 percent, while ten-year paper gained 4.5 basis points to 4.583 percent. It was the first time since August that ten-year yields rose above yields on two-year issues.

In Europe, yields rose even more than they did in the US. The two-year Schatz was 8.6 basis points higher to 3.927, while the ten-year Bund added 5.9 basis points to reach a yield of 3.952 percent. Most of the gains were related to US sell-offs.

Yields were up in the UK as well as sentiment increased that the Bank of England will raise interest rates by 25 basis points to 5.5 percent soon, perhaps as early as next month. Two-year gilts added 2.4 basis points to a yield of 5.367 percent, while ten-year gilts yielded 4.848 percent, a gain of 3.6 basis points.

Japanese government bonds bucked the day’s trend, with the yield on ten-year bonds falling 4 basis points to 1.555 percent even though the equities markets there rose significantly, usually a sign that bond yields will rise.

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