Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:
US: 1.98% (4bp)
UK: 2.02% (7bp)
Germany: 1.50% (5bp)
France: 2.14% (1bp)
Spain: 4.90% (-11bp)
Italy: 4.60% (-6bp)
[NOTE: there are 100bp to a percentage point]
The bonds landscaped was mixed on Thursday after the European Central Bank kept its benchmark interest rate unchanged at 0.75% as expected. Peripheral countries showed marked contractions in levels not seen in several weeks while macro-economic data influenced rates in the UK, France and Germany.
US bond yields climbed four basis points to 1.98% as data issued by the US Department of Labour's Bureau of Labour Statistics showed that non-farm business sector labour productivity decreased at a 1.9% annual rate during the fourth quarter of 2012. The decrease in productivity reflected increases of 0.5% in output and 2.5% in hours worked. From the fourth quarter of 2011 to the fourth quarter of 2012, productivity increased at 0.5% as output and hours worked increased 2.5% and 1.9% respectively.
The Department of Labour further published details of jobless claims, showing that in the week ending March 2nd, the advance figure for seasonally adjusted initial claims was 340,000, marking a decrease of 7,000 from the previous week's revised figure of 347,000. The four-week moving average was 348,750, a decrease of 7,000 from the previous week's revised average of 355,750.
The advance seasonally adjusted insured unemployment rate was 2.4% for the week ending February 23rd, unchanged from the prior week's unrevised rate.
In the UK, bond yields rose by seven basis points to 2.02% as the Bank of England's Monetary Policy Committee kept the benchmark interest rate unchanged at 0.5% and maintained the asset purchase programme of £375bn. The benchmark rate has remained at 0.5% for three years. Meanwhile, Prime Minister David Cameron affirmed his belief in sticking with current economic reforms. In a speech delivered in the north of England, the British Prime Minister was cited by the BBC as saying: "We are making tough choices about our future. But we are making the right choices. If there was another way, an easier way, I would take it."
In Europe's largest economy, Germany, bond yields expanded by five basis points to 1.50% as new data issued by Destatis Statistisches Bundesamt (the Federal statistics Office) showed that motor vehicles were Germany's most important export goods in 2012. Motor vehicles and motor parts accounted for €190bn, or 17.3%, of Germany's total exports. Machinery and equipment accounted for €164bn, chemicals and chemical products accounted for €104bn and computer, electronic and optical products accounted for €86bn.
Meanwhile, in France, bond yields rose by one basis point to 2.14% after the treasury sold €7.484bn of bonds, in line with the target sale of €6.5bn to €7.5bn. Data published by the National Institute of Statistics and Economic Studies (INSEE) showed that the unemployment rate increased by 0.3 percentage points in the fourth quarter of 2012 in metropolitan France. In the fourth quarter, the average ILO unemployment rate in metropolitan France and overseas departments stood at 10.6% of the active population.
In Spain, bond yields contracted by 11 basis points to 4.90% as the treasury reported that the country had covered 29.3% of their mid and long-term debt issuance. Some €5.04bn of bonds were sold at auction, slightly more than the €4-to-5bn that was expected.
In Italy, bond yields slid by six basis points to 4.60% after news agencies around the world reported the sentencing of former Prime Minister Silvio Berlusconi to a one year jail term by a judge in Milan.
Berlusconi's centre right coalition came second in February's inconclusive parliamentary election making the legal proceedings particularly relevent to the country's political position.
The Wall Street Journal reported that the sentence was for Berlusconi's "alleged role in revealing police transcripts to a newspaper owned by his family about an investigation into a banking scandal". Italian news agency ANSA cited Berlusconi as saying the prison sentence was the result of intolerable "persecution". The sentence is not final and under Itlian law, Berlusconi may appeal it and no jail time will have to be served until legal proceedings have been finished.
ANSA also reported political leader Beppe Grillo as saying there was a danger that the country could be ruled by "street violence" if his anti-establishment 5-Star Movement failed to change how the country was governed.