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Tradeweb Government Bond Update – January 2024

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Reversing December’s rally, 10-year government bond yields increased in January 2024 apart from those for Australia, which remained unchanged on the month prior at 3.96%. The country’s inflation rate fell to a two-year low of 4.1% in the December 2023 quarter, compared to the 5.4% pace in the year’s third quarter. The Westpac-Melbourne Institute Index of Consumer Sentiment declined 1.3% to 81 in January.

According to Japan’s Ministry of Internal Affairs & Communications, the annual inflation rate slowed for a second consecutive month to 2.6% in December. On January 23, the Bank of Japan decided unanimously to keep interest rates at -0.1% and its yield curve control policy at 1.0% as a reference. The country’s 10-year benchmark bond mid-yield rose 12 basis points to finish January at 0.73%.

Over in Europe, the month’s biggest mover was the yield on the UK 10-year Gilt, which climbed 26 basis points to 3.79%. At its January meeting, the Bank of England announced that it would maintain interest rates at 5.25%. The GfK Consumer Confidence Index increased to -19 in January, while the S&P Global/CIPS UK Manufacturing PMI weakened to 47.

In Spain, the 10-year government bond yield ended January at 3.13%, up from 2.96% in December. The country’s GDP grew by 0.6% in the last quarter of 2023, and the unemployment rate dropped to 11.76% in the same period. In contrast, the inflation rate rose from 3.1% in December to 3.4% in January. Meanwhile, the Greek 10-year bond mid-yield closed the month at 3.21%, rising from 3.04% in December. Greece’s inflation rate increased to 3.5% in December from 3% in November.

Elsewhere in the Euro area, Germany’s 10-year Bund yield finished the month at 2.16%, up from 2.01% in December. The country’s inflation rate was 3.1% in January, a slowdown from December’s figure of 3.8%. The HCOB German Manufacturing PMI registered at 45.5 in January, slightly higher than December’s 43.3 number. In Finland, the 10-year benchmark note yield increased by nearly 16 basis points to 2.69%, while the country’s annual inflation rate was 3.6% in December, up from a two-year low of 3.3% in November.

Across the Atlantic, the U.S. 10-year Treasury mid-yield ended January over 10 basis points higher at 3.96%. The country’s economy grew at a 3.3% annualised rate during the final quarter of last year, while the inflation rate for December was 3.4%. At its meeting on January 31, the U.S. Federal Reserve held interest rates steady for another month at the range of 5.25% and 5.5%. The Canadian 10-year government bond yield rose by 24 basis points to 3.32%, and the country’s inflation rate increased to 3.4% in December from 3.1% the previous month.



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