Yields sink as European tensions feed U.S. slowdown

Canadian bills – Bill prices eased slightly in response to the slight beat for employment trends during May. Owing to a jump in full-time jobs the economy added a net 22,300 positions sending the unemployment rate lower to 7.4%. But with 75% of Canada’s export heading U.S.-bound, the report is unlikely to change any conviction at the Bank of Canada as the clear picture remains one of American economic weakness. Thanks to a jump in Eurodollar futures, bill futures remain higher on the session although lower than this week’s best levels. Government bond prices rose to send the 10-year yield below 3% in to the weekend with the September futures contract adding 38 ticks to 125.00.

Australian bills – Asian stock markets failed to sustain a rally as risk aversion resumed. The local dollar fell while the trend towards further curve flattening was apparent in a gain for bill futures. The 10-year government bond price also rose sharply shaving six basis points off the yield to 5.17%.

Japanese bonds – Japanese yields bucked the trend as consumer confidence rose alongside machine tool orders in May. The September JGB future advanced by 13 ticks while the 10-year yield also advanced by one basis point to 1.13%.

Andrew Wilkinson is a Senior Market Analyst at Interactive Brokers LLC

Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results.

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About the Author
Andrew Wilkinson

Andrew is a seasoned trader and commentator of global financial markets. He worked for several London-based banks trading cash and derivatives before moving to the U.S. to attend graduate school. Andrew re-joins Interactive Brokers following a two-year stretch at a major Wall Street broker-dealer as their Chief Economic Strategist. His coverage of stocks, options, futures, forex and bonds regularly surfaces in global media, and over the last several years Andrew has made many TV appearances on Bloomberg, BBC, CNBC and BNN and Yahoo Finance.

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