Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

US: 1.90% (+4bp)
UK: 2.09% (+8bp)
Germany: 1.57% (+9bp)
France: 2.15% (+5bp)
Spain: 4.90% (-23bp)
Italy: 4.33% (-13bp)

[NOTE: there are 100bp to a percentage point]

US bond yields edged closer towards normalcy today as investors keyed off of the positive Chinese export figures which came out last night, while today's economic releases left hopes for a gradual improvement in the economy intact.

Initial US jobless claims were marginally higher than expected in the seven days running up to January 5th at 371,000, compared to the expected 365,000. However, continuing claims fell again, with week on week figures up to December 29th standing at 3,109,000 compared to 3,228,000 in the previous period.

In general global growth prospects were flattered by the higher than expected export numbers out from China overnight, with demand from Europe showing the first expansion China's December trade surplus was £19.5bn, considerably higher than expectations of a £12.3bn surplus.

Within the Eurozone, bond auctions in Spain and Italy combined with no major changes from the European Central Bank on the policy front, as expected, buoyed stability. That combination led to large drops in periphery bond yields along with the concomitant rise seen in core countries' yields.

The ECB left its key benchmark interest rate unchanged at 0.75% and the deposit rate was unchanged at 0% in line with predictions. Nevertheless, the relatively more upbeat tone of Mr.Draghi's speech led some observers to question whether an interest rate cut was still a real possibility, or not.

The Spanish Treasury sold €5.8bn Euros of bonds on Thursday, far higher than the €5bn which were expected to be sold.

Italy also saw some solid auction results, selling €8.5bn in 365-day bills with a bid-to-cover ratio of 1.79 versus 1.94 times the amount issued the last time around. The yield fell to 0.864%, which was the lowest since January 2010.

In the UK, the Bank of England maintained its benchmark interest rate at 0.5% and the size of its asset purchase programme at £375bn. Also to be had in account, and unexpectedly so, the Office for National Statistics (ONS) recommended that the government maintain its current retail price measure, the RPI.

Speaking on Bloomberg TV PIMCO fund manager Andrew Bosomworth said he saw that last decision as proof that the UK is a 'place to do business.'

RF

Related share prices