UK gilts yields up on interest rate anxieties

Yields on government bonds were up in the US, the UK and the Eurozone on Monday, leaving Japan as the lone market where prices on government bonds were higher on Monday. The two-year Japanese government bond dropped 1 basis point to a yield of 0.825 percent after the Bank of Japan’s Tankan survey of business sentiment was mixed.

In the UK, gilt yields were higher on fears that the Bank of England could raise interest rates when it next meets later this week. Retail sales that are higher than expected and new figures on mortgage lending have fed the rate expectations. The two-year gilt added 4 basis points to a yield of 5.460 percent, while ten-year gilts were 3.5 basis points higher to 4.972 percent.

Eurozone bonds added to their yields, as well. The two-year Schatz gained 2.8 basis points to 4.043 per cent and the ten-year Bund was 1 basis point higher to 4.075 percent.

In the United States, Treasury bonds discounted new data on manufacturing that was weaker than expected and paid more attention to other data that points to a possible cut in US interest rates this year. At mid-session in New York, two-year issues were 1.3 basis points higher , to a yield of 4.595 percent. Ten-year bonds were yielding 4.650 percent.

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