The following were the yield and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 1.99% (-2bp)
UK: 2.11% (11bp)
Germany: 1.64% (-3bp)
France: 2.27% (2bp)
Spain: 5.40% (19bp)
Italy: 4.44% (11bp)
[NOTE: there are 100bp to a percentage point]
Peripheral bonds remained under pressure on Monday as political sentiment raised concerns over the long-term stability of Spain and Italy.
In the US, the picture was brighter with bond yields falling two basis points buoyed by investor confidence following the release of encouraging jobs data last Friday. Data from the US Labor Department showed that there had been upward revisions to previous months' data.
Meanwhile on Monday, all eyes were on the Senate floor where Democratic leaders were expecting a gun bill to move to. The bill is expected to seek to impose more controls and limirts on the types of firarms that may be held by Americans.
In the UK, yields jumped by 11 basis points to 2.11% as Chancellor George Osborne warned that big banks would be broken up if they failed to follow new rules to ring-fence investment operations from High street outlets. His speech came the same day that the UK Parliament was scheduled to introduce its Banking Reform bill. This was met with mixed reactions with Anthony Browne, Chief Executive Officer of the British Bankers' Association saying the government's decision to reserve the power to electrify the ring fence was good politics but bad economics and would result in less lending.
Meanwhile, Europe's fastest growing economy, Germany, saw its yields slide by three basis points to 1.64% on a day devoid of major monetary decisions. Several influential individuals uttered political sentiments, among them Joerg Asmussen, the German member of the European Central Bank's executive board. Asmussen told Spiegel Online, a well-read German news website, that he predicted interest rates would rise again while arguing that the threat of inflation was lower than many believed. Meanwhile, Peer Steinbrueck, leader of Germany's Social Democrat Party and incumbent Chancellor Angela Merkel's number one opponent stressed reservations about Cyrus receiving a bailout.
French 10-year bonds rose by two basis points to 2.27% on the same day that the country completed its regular auction of Treasury bills. Some €4.0bn of three-month t-bills were sold with a bid-to-cover ratio of 2.10, whilst €1.89bn of six-month T-bills were sold with a bid-to-cover ratio of 2.67 and €1.50bn of 12-month T-bills were sold with a bid-to-cover ratio of 3.71.
On the foreign policy, French President Francois Hollande was quoted in Global Post media saying that Iran was still refusing nuclear transparency: "Despite all efforts, Iran is still refusing to be transparent," President Francois Hollande said at a press conference with US Vice President Joe Biden. "Therefore we will pressure it right to the end to ensure the negotiations succeed."
In Spain, yields soared a staggering 19 basis points to 5.40% as Spanish Prime Minister Marianao Rajoy faced calls to resign after allegations in El Pais, one of Spain's largest newspapers, accused the Premier of accepting illegal payments. Rajoy vehemently denied the allegations, saying he was committed to reforms that would steer Spain away from financial crisis.
Similar double-digit basis point rises were seen in Italy, where yields climbed 11 basis points to 4.44% as former premier Silvio Berlusconi was accused by Prime Minister Mario Monti of attempting to buy votes. Referencing Berlusconi's campaign promise to give Italian taxpayers a cash rebate of €4bn, Monti said: "We can call it a quid pro quo or even a friendly attempt at corruption," on an interview with RTL 102.5 radio. "Berlusconi wants to buy the votes of Italians with the money that Italians had to turn over to cover up the shortfall left in the public accounts by Berlusconi, who governed for eight of the past 10 years."