{"id":42,"date":"2007-02-23T22:52:01","date_gmt":"2007-02-23T22:52:01","guid":{"rendered":"http:\/\/www.the-finance-zone.co.uk\/?p=42"},"modified":"2007-02-23T22:52:01","modified_gmt":"2007-02-23T22:52:01","slug":"treasuries-rally-on-concerns-over-subprime-lending","status":"publish","type":"post","link":"https:\/\/the-finance-zone.co.uk\/index.php\/2007\/02\/23\/treasuries-rally-on-concerns-over-subprime-lending\/","title":{"rendered":"Treasuries rally on concerns over subprime lending"},"content":{"rendered":"

Government bonds rose on Friday, rounding off a mixed, range-bound week in which there was little market-moving news except for Japan raising interest rates, though only to 0.5 per cent.<\/p>\n

US Treasury <\/strong><\/span>prices rallied, but yields remained trapped in a long-standing range with investors waiting for a catalyst to shift rates in a decisive manner.<\/p>\n

The 10-year note yield ended the week steady at 4.68 per cent. However, the yield rose as high as 4.73 per cent on Thursday following stronger than expected consumer prices data for January and several speeches from Federal Reserve officials that warned of upside inflation risks.<\/div>\n

Traders said Friday\u00e2\u20ac\u2122s recovery was mainly related to month-end demand from money managers and concerns over the subprime mortgage market.<\/p>\n

Problems in the subprime market remain contained to that sector but some traders believe broader weakness in housing will ultimately damp down growth in the economy and sanction rate cuts later this year.<\/p>\n

\u00e2\u20ac\u0153We think that the drag from housing will ultimately translate into weaker US employment conditions, spurring rate cuts that will begin in May,\u00e2\u20ac\u009d said William O\u00e2\u20ac\u2122Donnell, fixed-income strategist at UBS. Interest rate futures price in a small chance of a rate cut by the middle of this year.<\/p>\n

The yield curve for Japanese government bonds <\/strong><\/span>continued to flatten on Friday.<\/p>\n

The yield on the two-year rose 2 basis points to 0.840 per cent but yields on ultra-long bonds fell, responding to steady demand from investors wanting to match long-dated liabilities with long-dated assets. The yield on the 30-year declined 1.5bp to 2.325 per cent.<\/p>\n

UK gilts<\/strong><\/span> and European government bonds <\/strong><\/span>rallied in tandem on Friday to end the week flat or better.<\/p>\n

Both were driven primarily by a surprisingly weak German Ifo index of business confidence, but were also helped later on by the pick-up in US Treasuries.<\/p>\n

Like US issues, European bonds have been confined to a tight range.<\/p>\n

\u00e2\u20ac\u0153The market has been looking for a trigger to help them break out of this range but this hasn\u00e2\u20ac\u2122t happened,\u00e2\u20ac\u009d said Jos\u00c3\u00a9 Garc\u00c3\u00ada-Z\u00c3\u00a1rate, analyst at 4Cast.<\/p>\n

The yield on the 10-year gilt ended the week up 0.3bp, and the yield on the 10-year bund was almost 2bp lower.<\/p>\n","protected":false},"excerpt":{"rendered":"

Government bonds rose on Friday, rounding off a mixed, range-bound week in which there was little market-moving news except for<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"colormag_page_container_layout":"default_layout","colormag_page_sidebar_layout":"default_layout","footnotes":""},"categories":[47],"tags":[],"class_list":["post-42","post","type-post","status-publish","format-standard","hentry","category-treasury"],"_links":{"self":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/42","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=42"}],"version-history":[{"count":0,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/42\/revisions"}],"wp:attachment":[{"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=42"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=42"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/the-finance-zone.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=42"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}