the bank of england<u+2019>s hesitance to add monetary stimulus sent selling pressure through government bonds on both sides of the atlantic, pushing up treasury bond yields for the first time in four sessions. the selling was cushioned by a u.s. report that showed a setback in the service industry with a pullback in employment. investors also refrained from placing big negative wagers on the bond market ahead of friday<u+2019>s key labor-market report and the u.s. presidential election next week. the yield on the benchmark 10-year treasury note settled at 1.811%, compared with 1.799% wednesday. yields rise as bond prices fall. the 10-year german bund yield rose to 0.158% from 0.13%. ten-year government bond yields in the u.k., france, denmark and sweden also increased. the boe held its interest-rate and bond-buying program steady thursday from its monetary-policy meeting. but the bond market was jolted by its playing down chances of further monetary stimulus as it raised its inflation forecast for 2017, driven partly by a weaker british pound. sizable monetary stimulus by major central banks in the developed world were a main driver that had sent government-bond yields to historic low levels this past summer. bond yields have been rising over the past month, driven by worries of less support from central banks. thursday<u+2019>s boe news added to that anxiety. <u+201c>the bank of england is the latest culprit<u+201d> for the bond market, said anthony cronin, a treasury bond trader at soci<u+00e9>t<u+00e9> g<u+00e9>n<u+00e9>rale sa . <u+201c>they were more hawkish in their meeting and this is causing a selloff in global fixed-income markets.<u+201d> in addition, a u.k. court ruled thursday that the government can<u+2019>t trigger negotiations to leave the european union without a vote from parliament. the news sapped the allure of haven debt as some analysts say that pro-eu lawmakers will have an opportunity to steer the country toward a <u+201c>softer<u+201d> exit, with more ties to the bloc and a more open immigration policy. this scenario would cushion the negative impact of brexit on the u.k. growth outlook. the u.s. jobs report friday will be the key datapoint of the week to influence market expectation over a possible interest-rate increase by the federal reserve next month. economists expect friday<u+2019>s release to show the u.s. economy added 173,000 new jobs last month, up from 156,000 a month earlier. a solid jobs report would bolster the fed<u+2019>s case to raise short-term interest rates. higher interest rates tend to shrink the value of outstanding bonds. the fed said in its latest monetary-policy statement wednesday that the case has continued to strengthen for a rate increase. still, next week<u+2019>s election result could muddle the fed<u+2019>s tightening plan, analysts say. over the past few sessions, trading has become more volatile on the prospect of a tighter race than many had anticipated. on thursday, the vix index, or the fear gauge on wall street, reached the strongest level since late june, a sign investors are worried about large price fluctuation in u.s. stocks. investors have shed their holdings of riskier bets and embraced haven bonds after news reports last friday that federal investigators have launched a new probe into private emails of hillary clinton, the democratic party<u+2019>s nominee for president. wagers that would benefit if donald trump, the candidate from the republican party, wins are mounting again after a recent pullback. among the most pronounced moves was the mexican peso, which has been under renewed selling pressure against the dollar lately. gold, seen by many as another haven market, has been strengthening over the past week and hit a one-month high wednesday. some analysts say a trump win in the short term would likely send bond yields lower, but in the longer term, bond yields may rise given his leaning toward fiscal stimulus, which would require more issuance of government bonds for funding and post a threat to the value of long-term treasury debt. bond yields have been rising after a big drop during the summer following the u.k.<u+2019>s referendum to leave the european union. the 10-year note<u+2019>s yield rose by 0.23 percentage point in october, the biggest monthly increase since june 2015. despite the rise, treasury yields remain historically very low. the yield traded at 2.273% at the end of 2015. it had been at 3% in early 2014. write to min zeng at min.zeng@wsj.com
boe sparks selling in u.s., european government bonds - wsj
min zeng