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

US: 1.84% (no change - markets closed all day)
UK: 2.05% (4bp)
Germany: 1.59% (4bp)
France: 2.17% (4bp)
Spain: 5.15% (7bp)
Italy: 4.21% (5bp)

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

US bond yields remained unchanged today as markets stayed shut for Martin Luther King Jr. Day. Barack Obama was sworn into office for his second term as President before hundreds of thousands of spectators.

UK bond yields rose by four basis points to 2.05% as the Bank of England published its quarterly report on lending trends. The report showed that the annual rate of growth in the stock of lending to UK businesses was negative, falling to approximately £4bn in the three months to November.

Gross mortgage lending in December reached an estimated £11.7bn, according to the Council of Mortgage Lending. This brought the estimated total for the year to £143bn, up from £141bn in 2011. The trade association forecast gross lending would reach £156bn in 2013.

In Germany, bond yields also increased by four basis points as Chancellor Angela Merkel was left reeling following the narrow defeat of her centre-right coalition in a key federal state. The eight-million-strong Lower Saxony state favoured a centre-left coalition comprised of the Social Democrat Party and Greens. This came despite Merkel's CDU winning the largest portion of votes for a single party.

The Federal Statistical Office, Destatis, published its 2012 index of producer prices for industrial products for Germany, showing a 2.1% rise on an annual average from the preceding year.

In Spain, yields jumped by seven basis points. This was linked by some to a Reuters report that the government is looking to sindicate a 10 year bond issue, details of which may arrive early on Tuesday morning. Santander sold €2bn in 5 year debt at 235.4 basis points above mid-swap.

The Iberian country's economics ministry's publication of its trade shortfall for November showed a 47.4% decrease in the country's red ink to €1.407bn -its lowest level since 1997. For the January to November period, the trade deficit stood at €29.46bn, representing a decline of 29.5%, although exports diminished slightly versus year ago levels.

In Italy, bond yields rose by five basis points as Italian finance Minister Grilli stated that confidence was growing in the Euro area and said that Italy's GDP for 2012 had probably contracted 2.4%.

In Davos, the World Economic Forum got under way and all eyes were fixed on the Bank of Japan, which is due to release a statement tomorrow after the Bank of Japan policy meeting.

MF

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