Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 1.92% (1bp)
UK: 1.85% (-1bp)
Germany: 1.38% (1bp)
France: 2.02% (1bp)
Spain: 4.86% (-3bp)
Italy: 4.52% (-7bp)
In the US, bond yields rose by one basis point to 1.92% as the Federal Reserve revised its index of industrial production and the related measures of capacity and capacity utilization. The revisions showed that the rate of capacity utilization for total industry was 0.8 percentage point lower in the fourth quarter of 2011 and 1.4 percentage points lower in the fourth quarter of 2012 than previously estimated. Capacity utilization rates for the fourth quarters of 2009 and 2010 were little changed.
In the UK, bond yields slid by one basis point to 1.85%, as Fitch placed the UK's "AAA" long-term issuer default ratings on Rating Watch Negative, indicating a heightened probability of a downgrade in the near term. Fitch said that the move to Rating Watch Negative reflected the latest economic and fiscal forecasts published by the Office for Budget Responsibility, which indicate that UK government debt will peak later and at a higher level than previously expected.
Meanwhile, the Treasury sold £4bn worth of bonds. This included £1.5bn of one-month treasury bills with a bid-to-cover ratio of 2.65, £1bn of three-month bills with a bid-to-cover ratio of 2.24 and £1.5bn of six-month bills with a bid-to-cover ratio of 4.178.
In Germany, bond yields rose by one basis point to 1.38% as German news media was awash with comments from senior politicians about the ongoing financial crisis in Cyprus. News website Spiegel reported that Chancellor Angela Merkel's patience with Cyprus appeared to be wearing out during a discussion with fellow politicians on Friday. "We want Cyprus to remain in the euro zone," the news website cited her as saying during a meeting with Free Democrat Party parliamentarians.
She then added in an angry tone - according to some participants - that the country was "taking things further than we have ever seen before". Meanwhile, Bild, another German newspaper, printed comments from Finance Minister Wolfgang Schaeuble saying that: "The crisis over Cyprus has had no measurable effect on interest rates for example [in] Spain or Portugal."
In France, bond yields increased by one basis point to 2.02% as the nation's National Institute for Statistics, INSEE, published its monthly business survey on the building industry. According to business leaders surveyed in March 2013, the situation was continuing to deteriorate in the building industry. The synthetic indicator of business climate lost one point and stayed below its long-term average. Order books were considered significantly lower than normal and the productive capacity utilisation rate declined slightly, staying below its long-term average. One business leader in five declared having difficulties with increasing their activity.
In Spain, bond yields slid by three basis points to 4.86% as Economy Minister Luis de Guindos told a news conference that the nation would ask its banks to make a contribution of €2bn to the country's deposit guarantee fund to help compensate investors in risky bank debt who lost money in the country's financial crisis.
Reuters news agency cited the politician as saying: "The Deposit Guarantee Fund will ask all of the financial institutions to make an extraordinary contribution, of 3 (euros) per every 1,000 in deposits. That means a quantity of approximately 2 billion euros."
The news agency also cited him as saying that smaller banks and weaker banks would be exempted from the extraordinary contribution.
In Italy, bond yields fell by seven basis points to 4.52% as a level of certainty was restored to the Mediterranean country after Italian President Napolitano gave Italy's centre-left Bersani a mandate to form a government after weeks of uncertainty following an inconclusive election.