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

UK: 1.76% (+2bp)
US: 1.68% (0.0 bp)
Germany: 1.50% (+1bp)
France: 2.19% (-1bp)
Spain: 5.76% (-4bp)
Italy: 5.02% (-9bp)

[There are 100 basis points to a percentage point]


Sovereign bond yields in the Eurozone periphery fell slightly today, despite ratings agency Standard&Poor's decision to downgrade its rating on Spanish bonds.

Thus, that country's sovereign debt was relatively well-behaved despite the above, which may reawaken talk that ratings companies are now largely "irrelevant," comment analysts at Digital Look, although "this is premature" they add.

Thus, it remains to be seen just what would happen should S&P or the other ratings agencies really lower the country's debt to junk status, which would force many fund managers to pare their holdings.

In a similar vein, analysts at ING pointed out that Spain's bonds are already trading at junk.

Also helping matters, the relatively solid results seen in today's Italian Treasury debt auction.

Of interest as well, France's consumer price index for the month of September dropped at a 0.3% month-on-month pace, well below the unchanged reading expected by most economists.

According to Bloomberg the EU may postpone the implementation of the Basel III capital rules.

Meantime, and in the US, initial weekly unemployment claims dropped by 30,000 to 339,000 last week (Consensus: 370,000), their lowest in four years.

The above seem to have been significantly distorted by seasonal factors. Nevertheless, Barclays Research is of the following opinion: "Overall, even when accounting for what appears to be a technically driven decline in this week's initial jobless claims, the longer-term trend in initial claims is suggestive of a modest improvement in labour market conditions."

Lastly, the FT reports tonight on speculation regarding an imminent boom in US oil exports.

AB

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