Bonds

LONDON (ShareCast) - Bonds pushed ahead in all markets on more gloomy economic data suggesting talk of a recovery could be very premature.

In the US, bonds soared after grim monthly jobs figure. US employers axed more jobs than economists thought they would during June, taking the unemployment rate up to a 26-year high.

Another 467,000 people joined the queue for work last month, far more than the 365,000 predicted. More than 6m American jobs have now been lost since the recession began, but the latest figure was the first month-on-month drop in four months.

Yields on both 10-year benchmark and 2-year notes fell by about 5 basis points as traders predicted that any recovery will be some way off if the jobs data is right. 10-year note yields were 3.48% at midday.

European bonds also climbed after the ECB held rates at 1%. The move was widely expected, but investors moved after ECB President Jean-Claude Trichet's comments in his press conference afterwards.

"The current rates are appropriate," he said but he did not rule out the option of further cuts, saying "we did not decide today that this was the lowest level we would attain under any circumstances."

Ten-year benchmark bunds tumbled 9 basis points to 3.32%, while short-dated bunds fell by 13 basis points to 1.22%.

"The further sharp rise in Eurozone unemployment in May maintains concerns about the strength of future consumer spending, while the producer price data highlight the current lack of inflationary pressures," said Howard Archer, chief UK economist at IHS Global Insight.

UK gilts also made gains. Ten year gilt yields fell by 3 basis points to 3.74%.