LONDON (SHARECAST) - The following were the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 1.86% (5bp)
UK: 2.05% (5bp)
Germany: 1.62% (5bp)
France: 2.18% (6bp)
Spain: 5.07% (4bp)
Italy: 4.14% (-3bp)
[NOTE: there are 100bp to a percentage point]
US bond yields rebounded from a decline yesterday, springing up by five basis points to 1.86% on Thursday. Two conflicting economic indicators came out, each potentially influencing the result. Data from the US Department of Labour presented better-than-expected results on jobless claims with US initial jobless claims for the week ending January 12th recorded at 335,000, considerably lower than the expected 369,000 claims. Meanwhile, continuing claims for the week ending January 5th exceeded expectations with 3,214,000 claims compared to the 3,155,000 predicted.
Contrasting with this data were the Philadelphia Federal Reserve Index's monthly results, which pointed to a soft start in 2013. The manufacturing index declined to -5.8 in January after a print of 4.6 in December. The diffusion index measuring new orders set a mark of -4.3 and that for prices paid 14.7.
Overall, the survey - widely seen as a barometer of US trends to come - suggested that activity in the region's manufacturing sector had decreased moderately this month.
UK yields rose by the same number of basis points as in the US to 2.05%. This came on the same day that the UK debt management office announced it had auctioned £1bn 01/8% index-linked treasury gilts with a maturity date of 2029. Total bids received were worth slightly more than two billion pounds.
Yields rose by five basis points for German ten year bonds to 1.62%. In Germany, Finance minister Wolfgang Schaeuble told Parliament that the problem of high indebtedness was not limited to the crisis-hit Eurozone and that the situation in Britain and the US is worse.
France led the pack with a six basis point rise in its yield to 2.18%. This came after France sold €2.35bn of bonds with a coupon of 2.5% and a maturity date of 2015. French car orders also declined by 3% in December, according to a survey published in Lettre VN.
In Spain, analysts concentrated on a 30-year debt sale which did not come in quite as well as some had hoped while in Italy bond yields slid three basis points to 4.14%. This came after an interview broadcast on Bloomberg TV publicised comments about high demand from the City at the last debt auction.
In its monthly bulletin, the European Central Bank reported that the global economy continued to grow at a modest pace, with the recovery slowly gaining some traction although the central bank said it remained fragile.
The bank further pointed out that yields on long-term bonds issued by Spain and Italy fell by around 20 basis points over the month, declining to the lowest levels seen since the ECB's announcement of Outright Monetary Transactions.