Bonds: US yields plateux as Obama slams Republic debt plans

Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

US: 2.00% (no change)

UK: 2.19% (-1bp)

Germany: 1.63% (-1bp)

France: 2.26% (no change)

Spain: 5.18% (-5bp)

Italy: 4.37% (-2bp)

[NOTE: there are 100bp to a percentage point]

US bond yields remained flat at 2% on Tuesday after President Barack Obama delivered a speech warning that people would lose their jobs if deep budget cuts proposed by Republicans were allowed to take effect on March 1st. He warned that the $85bn (£55bn) of earmarked cuts was a harmful, "meat-cleaver approach" to tackling deficit reduction.

In the UK, bond yields contracted by a single basis point to 2.19% as the Bank of England appointed Andrew Bailey as Deputy Governor of the Bank and Chief Executive Officer of the Prudential Regulation Authority, the replacement for the Financial Services Authority.

In Europe's largest economy, Germany, bond yields fell by a single basis point to 1.63% as the influential ZEW Survey showed a higher-than-expected economic sentiment indicating increasing levels of confidence in the country. The index recorded a reading of 48.2 in February, up from the previous month's reading of 31.5 and surpassing expectations of a 35 reading.

Meanwhile in France, yields plateaued at 2.26% as President Francois Hollande was quoted by Associated Press magazine as saying that France would grow by less than previously expected this year. "Everyone knows that for 2013, we will not reach our target, which was 0.8%," the magazine cited him as saying.

The country which saw the greatest reduction in bond yields was Spain, where the rate on 10-year bonds slid five basis points to 5.18%. This happened as the Treasury issued €23.9bn of medium and long term debt in 2013 and the government's economy ministry reported that the trade deficit had narrowed 33.6% to €30.8bn in 2012. Exports fell 3.8% to €222.6bn.

As the Italian parliamentary elections edge closer this weekend, bond yields contracted by two basis points to 4.37%. Analysts, economists and political pundits were all weighing in on the likely impact of the vote which many have described as a significant "risk event". The country faces challenges over the coming years as it attempts to pay off a £2tn public sector debt.

MF

Recommended

Which assets will benefit as the “jam tomorrow” bubble pops?
Investment strategy

Which assets will benefit as the “jam tomorrow” bubble pops?

With tech stocks, cryptocurrencies and many other “long duration” investments crashing hard, the “jam tomorrow” bubble looks to be bursting. John Step…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Share tips of the week – 21 January
Share tips

Share tips of the week – 21 January

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Jan 2022
Seven cheap defence stocks to buy now
Share tips

Seven cheap defence stocks to buy now

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy de…
21 Jan 2022

Most Popular

Shareholder capitalism: why we must return power to listed companies’ ultimate owners
Investment strategy

Shareholder capitalism: why we must return power to listed companies’ ultimate owners

Under our system of shareholder capitalism it's not fund managers, it‘s the individual investors – the company's ultimate owners – who should be telli…
24 Jan 2022
Three innovative Asian stocks to buy now
Share tips

Three innovative Asian stocks to buy now

Professional investor Fay Ren of the Cerno Pacific Fund highlights three of her favourite Asian stocks to buy now
24 Jan 2022
Ask for a pay rise – everyone else is
Inflation

Ask for a pay rise – everyone else is

As inflation bites and the labour market remains tight, many of the nation's employees are asking for a pay rise. Merryn Somerset Webb explains why yo…
17 Jan 2022