European government bonds higher after weak US payrolls |
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Published
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Fri, 04 May 2007 16:13
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LONDON (Thomson Financial) - European government bonds rose, tracking Treasuries, after US jobs data came in below expectations.US payrolls rose by 88,000 in April, whereas analysts were expecting 115,000, while the past two months were also revised down. The unemployment rate rose to 4.5 pct from 4.4 pct, as expected.The data came after a strong report last month and continues a see-saw pattern in the data, suggesting the Federal Reserve will keep its interest rates on hold for a while longer.'It's not that bad of a labour situation to justify a Fed response,' said Jeoff Hall at Thomson's IFR Markets.He noted that although the headline number was weaker than expected, 'the three-month average is not that far off the trend growth rate.'Furthermore, if weather was indeed a factor restraining growth in April, one can expect a larger gain in May employment,' Hall said.Gains in European bonds were mostly seen in longer-dated maturities, with shorter ones still underperforming on the widely held view that European interest rates are due to rise again, possibly as early as next month.Earlier today, bonds were also supported somewhat by the euro zone services PMI, which came in at 57.0 for April, below the 57.5 analysts were expecting and the 57.4 level in March.However, it remains at historically strong levels, while retail sales came in in line with expectations, confirming the fairly strong growth outlook.'This is the sort of trend that will hearten the ECB's case for higher rates ahead,' said David Brown at Bear Stearns.The ECB will meet next week -- as will the Federal Reserve -- but both are expected to remain on hold, with the ECB likely to hike in June.In the UK, gilts were also higher, tracking the wider market, in an absence of domestic data.The Bank of England is yet another central bank to hold a policy meeting next week, and is widely expected to raise interest rates to 5.50 pct in response to high inflation, money supply, retail sales and domestic growth.At Yield Change on1540 BST pct previous closeJune euribor future (Liffe) 95.86 unchangedSept euribor future (Liffe) 95.72 up 0.01GERMANYJune bund future (Eurex) 113.74 up 0.263.75 pct Jan 2017 govt bond 96.47 4.20 up 0.27FRANCE3.75 pct Apr 2017 govt bond 96.04 4.25 up 0.21ITALY4.00 pct Feb 2017 govt bond 97.14 4.41 up 0.26UKJune gilt future 106.62 up 0.174.00 pct Sept 2016 govt bond 91.84 5.10 up 0.12June short sterling future 94.16 dn 0.01September short sterling future 94.05 unchangedcarlo.piovano@thomson.comcp/cp/jsaCOPYRIGHT
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European government bonds firmer ahead of key US jobs data 