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Government bond yields sink to record lows on double dip fears
by James Phillipps on Aug 25, 2010 at 08:10
Government bond yields in the UK, US and Germany hit record lows yesterday as investors ran for cover after more weak economic data.
Commodity prices also went into tailspin as fears about the slowing economic recovery gathered pace.
The markets look set to come under further pressure this week with durable goods orders, consumer confidence and the revised US second quarter GDP data all set to be released. Federal Reserve chairman Ben Bernanke is also set to address the markets about the Fed’s move to reinvest cash from maturing mortgage-backed securities on Friday.
The concerns about the economy were exacerbated yesterday by the revelation that purchases of previously owned homes unexpectedly sank by 27.2% in July to a 15 year low.
The FTSE sank by 1.51% on the news, while the Dow Jones fell 1.32% and the S&P 500 was down as much as 1.9% as investors took flight.
The wall of money piling into ‘safe haven’ government debt pushed the yield on benchmark 10 year German government bonds down to record lows of 2.15%, while gilt yields fell to 2.85% and Treasuries slumped to their lowest yield since the market nadir of March 2009 at 2.47%. Two year Treasury notes hit a record low of 0.46%. Euro investors were also hit by fresh concerns about Ireland after the country was downgraded to AA- by Standard & Poor’s and given a negative outlook.
The yen’s safe haven status was underlined as it rose to a 15 year high against the dollar as investors took flight from more risky currencies, such as the Australian dollar- hamstrung by hung parliament fears.
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4 comments so far. Why not have your say?
Anitaki
Aug 25, 2010 at 09:39
So where are all the overpaid journalists who have for the last year or so regularly been telling anybody who wants to read their uninformed drivel, that investors should get out of Gilts?? Are these people authorised to give financial advice??
report thisCharles de Lastic
Aug 25, 2010 at 12:34
Unfortunatley Journalists can write whatever they want as their "advice" in the papers is exempt from FSMA 2000 and so they do not have to be qualified or authorised.
It's the people who take their advice who should know better. However, until financial advisers and planners improve their image and reputation with the general public we do not have the influence we should have.
Embracing TCF, the RDR and getting to Chartered status for the majority of advisers is the way forward
report thisMPT
Aug 25, 2010 at 15:10
Re: Anitaki
Aug 25, 2010 at 09:39
.So where are all the overpaid journalists who have for the last year or so regularly been telling anybody who wants to read their uninformed drivel, that investors should get out of Gilts?? Are these people authorised to give financial advice?? "
Is it the time to get out now ? Is it the bottom for equities if we have that much fear in the market?
report thispeter davies
Aug 26, 2010 at 13:32
Agreed, many journalists and indeed many/most of the large investment houses advocated a retreat from gilts at the start of the year and their predictions were clearly mis-timed. The rationale for suggesting gilt values would fall seemed perfectly plausible. I didnt see many advisers commenting on this site at that time saying that they thoughts gilts would have a sharp increase in 2010. Its all to easy to comment with the benefit of hindsight chaps. Dont shoot the journalist, they give their predictions and comments. It isn't advice at the end of the day, its one of many stories that are aimed at selling papers and publications.
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