Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 1.95% (1bp)
UK: 2.10% (2bp)
Germany: 1.61% (no change)
France: 2.24% (1bp)
Spain: 5.43% (7bp)
Italy: 4.61% (5bp)
[NOTE: there are 100bp to a percentage point]
Periphery bond yields saw the most movement on Monday ahead of a week of treasury sales and European talks to discuss the future of Cyprus.
US treasuries fluctuated slightly as the world's largest economy geared up for the sale of $72bn of coupon-bearing securities this week. Ten year bond yields ended the day up one basis point at 1.95%.
In the UK, yields picked up by two basis points to 2.10% after a survey was published by UK accountancy firm BDO indicating that business confidence was at an all-time low. The company's Optimism Index - partly based on the views of 4,000 respondents as well as several other reports - fell to 88.9 in January, making it the eighth consecutive month when the index recorded a reading below 95, the minimum needed to demonstrate growth.
French bond yields contracted by a single basis point to 2.24% as the government unveiled a wave of economic data indicating growth in key sectors. Industrial production contracted by less than had been expected in December, falling by just 0.1% month-on-month compared to the anticipated reduction of -0.2%, according to national statistics institute INSEE. Manufacturing production was also greater than expected, growing at 0.1% month-on-month in December compared to an expected contraction of 0.3%.
Still reeling from the 12-day-old allegations that its Prime Minister was involved in corruption, Spain saw its yields climb seven basis points to 5.43%. This followed Prime Minister Mariano Rajoy publishing a summary of his income and tax accounts on the weekend in a bid to diffuse the allegations which he has always denied. Meanwhile, on Monday, Spain was gearing up to issue 5.5bn euros in six-month and 12-month treasury bills at auction on Tuesday.
With just a fortnight left until its national elections, Italian bond yields were climbing noticeably at the close of play on Monday, having risen by five basis points to 4.61%. A tension-fraught weekend fuelled the campaign for leadership that is now in its final stage. Outgoing Prime Minister Mario Monti, whose once huge opinion poll lead has been dented by 76-year-old former PM Silvio Berlusconi's strong campaigning, expressed frustration at the role of Berlusconi in wider European politics.
"They've had enough of an Italy which puts itself, the Eurozone and Europe at risk through its political fragility, its inability to make decisions and its financial indiscipline," he was cited by Reuters as having told TV station TGCom24.
Across the board, the macroeconomic picture for Europe, remained mixed with the spotlight of attention having shifted squarely from Spain to Cyprus. European Central Bank executive board member Joerg Asmussen told German business daily Handelsblatt, that he believed an aid package for Cyprus would be ready by the end of the next month.
"I expect the aid programme for Cyprus will be in place by the end of March," he said. "There must be no doubt about this: if Cyprus gets no external help; it will slide into default."
Meanwhie, the Organisation for Economic Cooperation and Development said that leading indicators showed stabilising growth or the Eurozone, with a reading of 100.4 having been recorded in December compared to 100.3 in November.