Bonds: US Treasuries fall on election uncertainty

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

UK: 1.82% (+/-0bp)
US: 1.70% (+1.3bp)
Germany: 1.43% (+0.4bp)
France: 2.199% (-1.5bp)
Spain: 5.673% (-9.3bp)
Italy: 4.909% (-9.5bp)

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

US Treasuries declined on Tuesday as the eagerly-anticipated presidential race draws to a close this evening, with uncertainty clouding the outlook for the world's largest economy.

Polls show a tight race between current Democratic President Barack Obama and Republican candidate Mitt Romney.

The latest update from The Wall Street Journal, after taking an average of polls conducted by Real Clear Politics, gives Obama a slight 48.8% to 48.1% margin. However, the Gallup Poll gives Romney a one point advantage over Obama (49% to 48%).

Meanwhile, the Federal Reserve is looking to sell $72bn in US debt this week, with the first issuance ($32bn in three-year bonds) scheduled for this afternoon. This will be followed by the sale of 10-year notes tomorrow and a $16bn sale of 30-year maturities on Thursday.

French bonds gained today after the government unveiled €20bn-worth of tax breaks over three years. Businesses will get €10bn of tax credits next year and a further €5bn each in 2014 and 2015, in an effort to improve investment and employment.

Elsehwhere, Spanish and Italian debt was in demand today, with yields on the respective benchmark bonds dropping sharply.


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