These were the yields and basis point movements of some of the most watched 10 year bonds by the close in Europe:

Spain: 5.95% (-12bp)
Italy: 5.12% (-9bp)
France: 2.21% (0 bp)
Germany: 1.46% (0 bp)
UK: 1.73% (+4bp)
US: 1.64% (+3bp)

There are 100 basis points to a percentage point

Whereas yields rose in the UK and Stateside European fixed income markets actually saw gains (and a retreat in yields). That as speculation of further economic stimulus in China provided resistance to a rise in the former two markets.

Thus, investors spent the better part of the day waiting for the Spanish government's press conference in which Madrid was expected to unveil its budget for 2013. A quarter of an hour before the close, and several hours later than expected, Mariano Rajoy's government finally announced 43 measures which have been designed to stimulate the economy and cut the deficit by 13bn euros.

As a back-drop, today the regional parliament in Catalonia took another step towards convening a referendum on independence.

Meantime, and in Italy, authorities sold approximately 5.7bn euros in medium and long-term sovereign debt and at noticeably lower yields.

Back in the UK, the latest GDP data led The Economist to write that "The economic storms that have deluged Britain since 2008 have not cleared entirely. There is no reason for policymakers to relax, let alone celebrate. But the weather at last appears to be improving somewhat."

The news was less good for the UK's balance-of-payments, with the current account deficit widening to an unprecedented £20.8bn or 5.4% of GDP -the worst reading since 1988- in the second quarter, led by drops in investment income and net exports."

Finally, and in the US, today's data was decidedly mixed. However, at the moment employment seems to be the most important thing for markets. In this regard, first time jobless claims fell by more than expected, to a two-month low, by 26,000 to 359,000 (Consensus: 378,000).

As well, the preliminary estimate of the 2012 benchmark revision indicates an upward adjustment of 386,000 to non-farm employment, or a bit over 32,000 jobs per month from April 2011 to March 2012 on average.

AB

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