The following were the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

US: 1.97% (-2bp)
UK: 2.09% (-3bp)
Germany: 1.62% (-3bp)
France: 2.26% (-1bp)
Spain: 5.40% (2bp)
Italy: 4.52% (5bp)

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

US bond yield contracted by two basis points as data published by the Mortgage Bankers' Association showed that the number of mortgage applications filed in the US had risen by 16% last week compared to in the previous week. The share of applications filed to refinance existing mortgages totalled 78%, a fraction lower than last week's 79%. Adjustable rate mortgages made up 3.7% of total activity.

Meanwhile, the Federal Reserve - the US' central bank - told Reuters news agency that information had been stolen from its servers during a hack attack. Individuals whose data was stolen had been contacted by the Fed, a representative told the news agency.

"The Federal Reserve system is aware that information was obtained by exploiting a temporary vulnerability in a website vendor product," a spokesman was reported as saying.

In the UK, 10-year bond yields slid by three basis points to 2.09% as data from the Halifax House Price Index showed house prices in the three months to January were 1.9% higher than in the previous three months. This was the biggest rise for three years since January 2010. Over the month of January, house prices fell by 0.2%, following successive rises in November and December.

Meanwhile, the Institute of Fiscal Studies published its Green Budget forecasting that UK borrowing would be £64bn higher than previously estimated between 2014 and 2015. The London-based think tank indicated that a weak economy would mean the government would have to borrow more than it forecast unless it imposed tax rises and further spending cuts.

In Germany, bond yields slid by three basis points to 1.62% as data from the Deutsche Bundesbank was released showing that factory orders had dropped more than expected in December. Orders fell for the 12th month in a row by 1.8%. Meanwhile, Andreas Schmitz, President of the Association of German Banks, was vocal in his disagreement with a bill passing through the German cabinet about the scope of financial regulation.

"The package of measures to regulate the financial markets adopted by the Cabinet today is the wrong approach," Schmitz said. "The bill broadly weakens Germany as a financial centre and the established German universal banking system. It is explained mainly by the upcoming election campaign."

In France, bond yields fell by one basis point to 2.26% as Finance Minister Pierre Moscovici was quoted telling Reuters news agency on the sidelines of a business fair that he felt the euro rate should be discussed at Eurogroup. "The euro's level is not a negligible matter for growth," he said. "Even if there must be no pressure on the European Central Bank, discussing among Europeans what might constitute a fair level for our currency and how to get there is legitimate, and it is also legitimate among other big countries and economic zones, at the G20."

Data published by Fotocasa.es and the IESE Business School showing that Spanish home prices were little changed in January prompted a two basis point rise in bond yields to 5.40%. The barely changed house price represented the first month in three years when a decline had not been recorded. The average price of a house was 1,890 euros per square metre compared with 1,891 euros per square metre in December.

The European Union also announced that it had cleared an extension of Spain's guarantee programme until June 30th.

In Italy, 10-year bond yields rose by five basis points to 4.52% as former Premier Silvio Berlusconi improved in polls ahead of the general elections, fuelling fears of renewed financial instability in the country.

MF

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