FEDERAL Reserve chairman Alan Greenspan proved his powers of persuasion once again this week when hawkish comments during his Humphrey-Hawkins testimony sparked a sell-off in government bond markets. From Tuesday, when Greenspan hinted that the next move in US interest rates may be upwards, yields on US Treasuries began rising and the long bond sliced through the 5.5% level to reach its highest yield since last August. After initially resisting the negative move, European markets followed the US lower and the yield on the 10 year Bund rose to 4%.
February 26, 1999