Eurobond Market Isn't Likely to Improve Even With Narrowing of U.S. Trade Gap --- A Wall Street Journal News Roundup
LONDON -- International bond markets are wallowing in gloom, and even a brighter U.S. trade picture is unlikely to provide much relief.</br></br>Even if the figure for U.S. merchandise trade in August are an improvement from July's record gap, it will take months of improvement in the U.S. trade situation to overcome the skepticism in the market, participants say.</br></br>Meanwhile, the focus is on broader economic concerns, ranging from the resurgence in world-wide expectations of accelerating inflation to increases in U.S. and Japanese interest rates.</br></br>"It's almost as if people have come to expect the worst news on trade," says George Magnus, an economist at Warburg Securities in London. "The focus now is more on things that don't come out in monthly releases, such as interest rates and monetary policy."</br></br>Although short-covering by Eurobond traders Friday offset the bearish influence of the falling prices of U.S. Treasurys and rising yields, and Eurodollar bond prices were little changed, syndications specialists say they were discouraged by the rise in rates among shorter maturities of dollar bonds, which resulted from the U.S. Treasury's auction of four-year and seven-year bonds last week.