Yields and basis point (bp) movements of some of the most-watched 10-year bonds this afternoon:

US: 1.93% (3bp)
UK: 1.96% (-1bp)
Germany: 1.45% (no change)
France: 2.12% (no change)
Spain: 5.02% (-2bp)
Italy: 4.66% (-7bp)

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

US bond yields rose by three basis points to 1.93% as private sector employment increased by 198,000 jobs from January to February, according to the ADP National Employment Report in collaboration with Moody's Analytics. The report, which is derived from ADP's actual payroll data, measures the change in total nonfarm private employment each month on a seasonally-adjusted basis. By contrast, the report's January figures reported job gains of 192,000, which was later revised upward by 23,000 to 215,000 jobs. The data further showed that goods producing employment rose by 34,000 jobs in February, driven largely by a gain in construction jobs of 21,000. Manufacturers added 9,000 jobs and service-producing jobs increased by 164,000.

In the UK, bond yields fell by one basis point to 1.96% as the Halifax House Price Index showed that prices in the three months to February were 1.9% higher than in the previous three months. This was the third consecutive increase in prices on the measure of the underlying trend and was the same as the increase in January. Martin Ellis, Housing Economist at Halifax, commented: "This increase in both house prices and activity in recent months is consistent with evidence of some improvement in the market conditions. The more than half a million increase in the number of people in employment over the past year is likely to have been a factor supporting housing demand."

In Germany, bond yields were flat at 1.45% as the treasury sold €3.14bn in 0.5% 2018 with a bid-to-cover ratio of 1.9.

In France, bond yields also plateaued at 2.12% after the treasury sold an additional €238m in T-bills after Monday's auction. Meanwhile, French Finance Minister Pierre Moscovici, Minister for the Economy and Finance, appointed Ambroise Fayolle to head Agence France Tresor, the French debt management office.

In Spain, bond yields contracted by two basis points to 5.02% as unsubstantiated market rumours claimed that a Spanish Debt Management Office official said that if market conditions remain stable, Spain might issue second ten-year bond in coming months. At the time of publication, ShareCast was not able to verify the source or accuracy of this rumour.

Meanwhile, markets had time to digest the International Monetary Fund's second progress report on financial sector reform in Spain. The main finding of the report was that major progress had been made in implementing financial sector reforms. "The programme remains on track; the clean-up of undercapitalised banks has reached an advanced stage and key reforms of Spain's financial sector framework have been either adopted or designed," the report stated. In gist, the report showed that the bulk of the measures for the entire programme have now been completed.

In Italy, bond yields slid seven basis points to 4.66% as Italian centre left leader Pier Luigi Bersani publicly unveiled details of how he wanted to change the government. Posted on his Partito Democratico (Democratic Party) website, the leader unveiled "Eight points for change of government". This included reform of political and public life and laws on conflicts of interest.

MF

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