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Coutts-Bonds: Yields on Gilts depressed by temporary factors, BoE's Bean says

July 1, 2014

ENP Newswire - 01 July 2014

Release date- 30062014 - Bonds: Yields on Gilts depressed by temporary factors, BoE's Bean says.

The following were the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon: US: 2.52% (-1bp) UK: 2.67% (+1bp) Germany: 1.25% (+0bp) France: 1.60% (+0bp) Spain: 2.67% (+0bp) Italy: 2.73% (+0bp) Japan: 0.57% (+0bp) Portugal: 3.64% (+0bp) Greece: 5.95% (-2bp) Sovereign bond markets were calm on the first day of a holiday shortened week Stateside due to the July 4th celebrations.

Yields on long-term Gilts were ever so slightly higher, perhaps helped along by comments from outgoing Bank of England Deputy Governor Charlie Bean to the effect that yields lower than what has been the historical norm was only the result of temporary factors.

In the long-term (meaning beyond five to ten years) they could 'easily' rise back to between 4-5%, Bean told Sky News in an exclusive interview.

Today's figures on lending to individuals offered a mixed bag to investors.

While mortgage approvals retreated to an 11-month low in May lending to non-financial companies rose for the first time in nine months and by the most since the series began in March 2011.

Dr.Howard Archer at IHS Global Insight warned however that it may turn out to be just another false dawn.

Back Stateside, investors were in an uproar over the bill signed last week by Puerto Rico's Governor, Alejandro Garcia Padilla, which allows some public corporations to restructure their debt outside of bankruptcy proceedings - what for many is a default by another name.

Meanwhile, the National Association of Realtors's index of pending home sales expanded at a 6.1% month-on-month pace in May (consensus: 1.5%). MNI's Chicago PMI printed at 62.6, down by 2.9 points from the month before, versus the 63 point read expected by economists. Acting as a backdrop, Argentina was set to miss a bond payment on Monday, which could potentially lead the country into its second default - on 28.7bn of dollar bonds - in 13 years. Lastly, back in the Eurozone analysts noted the slightly lessened pace of contraction seen in the rate of new loans to the private sector, excluding loan sales and securitisations, as per the latest monthly figures on money supply.

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Source: ENP Newswire

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