UK gilt yields decline

Yields were lower on government bonds in the UK on Thursday after the Bank of England decided to keep interest rates at their current 5.25 percent for the time being. The decision was expected by most analysts, but there are wide expectations that rates will be sent higher next month, at the Monetary Policy Committee’s next meeting.

Late in the day in London, two-year gilts were 3 basis points lower to a yield of 5.423 percent, while ten-year gilts were yielding 4.991 percent, just slightly lower.

In the Eurozone, industrial production figures out of Germany that were better than had been anticipated, the long weekend ahead, and the release of 15 British naval personnel from Iran that made investors willing to take on more risk all combined to send yields on the two-year Schatz up 1 basis point to 4.034 percent. Yields on the 10-year Bund were also higher, gaining 3 basis points to 4.093 percent.

US Treasury bond yields were higher as investors anticipated new employment figures, due to be released on Friday, which will be a short day for bonds traders due to the holiday weekend. Ten-year Treasuries were 3 basis points higher to a yield of 4.68 percent. Thirty-year paper was also higher, yielding 4.87 percent.

In Japan, an auction of ¥500 billion in 10-year government bonds linked to the CPI attracted demand that was three and a half times the available supply. In the absence of any other news, the ten-year JGB held steady at a yield of 1.690 percent.