Bonds: Treasuries pushed higher by strong housing data

LONDON (ShareCast) - Sovereign bond markets were again well bid on Tuesday, although US Treasuries came under selling pressure following a stronger-than-expected reading on US housing starts. They shot higher by 20.2% month-on-month in April to reach an annualised rate of 1.135m, far outpacing economists´ forecasts for a reading of 1.015m.

Economists at Barclays (LSE: BARC.L - news) attributed the rise to the passing of the weather-related weakness seen over the first quarter, with the data being consistent with a return to normalcy in the housing sector.

Europe-side, the ZEW institute´s economic confidence gauge for May dropped to a reading of 41.9 fro 53.3 in the month before (consensus: 49). Significantly, consumer prices in the UK slipped by 0.1% year-on-year in April, the Office for National Statistics (ONS) reported - their first drop since 1960.

Predictably, BoE (Shenzhen: 000725.SZ - news) governor Mark Carney was quick to point out to ITV (LSE: ITV.L - news) that the cost of living would recover in the back half of the year. 'Enjoy it while it lasts', was his message to Britons.