| Bonds plunge as US debt loses its appeal { June 12 2007 } Original Source Link: (May no longer be active) http://www.ft.com/cms/s/0c099fba-1935-11dc-a961-000b5df10621.htmlhttp://www.ft.com/cms/s/0c099fba-1935-11dc-a961-000b5df10621.html
Bonds plunge as US debt loses its appeal By Joanna Chung
Published: June 12 2007 23:40 | Last updated: June 13 2007 13:26
Government bond yields in the eurozone and the UK soared to fresh multi-year highs on Wednesday as investors nervous about rising interest rates continued to dump bonds.
US government bonds yields also jumped during afternoon trading in London, with the 10-year US Treasury yield hitting 5.333 per cent. The yield on the 10-year Bund was 6.3 basis points higher at 4.676 per cent while the 10-year gilt was yielding 5.514 per cent, up 8.4 basis points.
The movements put US Treasury and eurozone government bond yields at five-year highs and UK gilt yields at nine-year highs.
The punishing sell-off in the bond market, which began to accelerate last week, comes amid growing fears that central banks around the world will continue to rate interest rates on evidence of strong economic growth and rising inflationary pressures.
The upward trend in government bond yields is also set to make corporate borrowing more expensive, potentially undermining the easy credit conditions that have been supporting the global buyout boom.
In Europe, an expected supply of some €11bn of paper put further pressure on bond prices, helping to push up yields on Wednesday.
“Clearly supply pressure is taking its toll on sentiment that is already overwhelmingly negative,” said Charles Diebel, an analyst at Nomura International in London. “To say the move is out of control is an understatement and there is without doubt, something of a crisis of confidence.”
Investors are now looking towards the releases of retail sales data in the US later on Wednesday.
Copyright The Financial Times Limited 2007
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