CONSUMER confidence data from the US kept the UK Government bonds market under the cosh yesterday, eroding early gains.
The gilts market traded higher in morning trade, but gave up some of those gains in the afternoon after University of Michigan figures showed that US consumers remain confident about the economic outlook.
The index of consumer confidence edged lower to 95.8, from 95.9 last month. Analysts took the figures as a sign that consumers remain concerned about the US jobs market and trends in the wider economy.
However, some traders were looking for a more pronounced fall in confidence, effectively limiting the upside in gilt prices. The curb on rises came despite expectations from analysts of a rise in confidence in this month’s index.
Dealers said traders were also taking in Thursday’s soft inflation and manufacturing data from the US. Although economists are still of the belief that the Federal Reserve is heading for an increase in interest rates when it meets next week, traders speculate that pressure for future rises has diminished.
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Short-term bonds outperformed long-term paper, with the December gilt future up 15p to £107.03. Treasury 4 per cent 2009 gained 18p at £96.59. Treasury 6 per cent 2028 edged off 1p at £118.25.