/Financial Times, February 25, 03/ - Last week Government bonds were leaders among other markets because the bonds of the USA and Great Britain showed their readiness for the war.

It's expected this week countries will pursue UNO's Security Council for supporting of resolution, which allows to attack Iraq.

Uncertainty about the time of the war's starting remained treasury bonds in favor, and economic data showed decrease of production activity and the record trade deficit, which also stimulated demand for state debts.

However on Friday treasury bonds fell on account of profit fixation. 10-year securities fell by 5/32 to 99 27/32, whereas the yield was 3.892%, and 30-year ones - by 9/16 to 108 1/32 with the yield 4.847%. 2-years bonds were on the level 100 1/32 (1.596%).

European markets were also moving due to geopolitical fears. "Almost keeping from paying attention on economics and stock markets this week, bonds' prices rose", says analyst of UBS Warburg Jiliom Salomon.

Taking into account the hung over markets uncertainty, major institutional investors did not wish to change their positions greatly. "I don't think managers of real money will do something now, there are too many uncertainties", Salomon added.

At British market, expectation of new Government securities offer left such institutions as pension funds out of market. "traditional investors, especially long securities' investors, were almost absent", says the broker services head of ICAP Trevour Rude. "There is no sense to buy on the threshold of big auctions on long securities the next week".

On Wednesday Debts management Department of Great Britain will conduct auction on floatation of bonds for 2.75 bn pound sterling with maturity in 2036.

Though during the week yields of eurozone's short bonds reached new record minimums, and yield of British 10-years bonds was on 4-year minimum, analysts do not forecast a turning at the market.

Yield of 2-year German liabilities, having fallen to record minimum 2.366% on Friday's morning, rose by 2.2 b.p. to 2.424%. Yield of 10-year ones rose by 4,№ b.p to 3.946%. Yield of 2-year British debts was on the level of ,№307%, and yield of 10-year ones rose by 4 b.p. to 4.174%.

[2003-02-25]