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

US: 1.90% (+1bp)
UK: 2.08% (-2bp)
Germany: 1.59% (+3bp)
France: 2.16% (+1bp)
Spain: 4.88% (-2bp)
Italy: 4.12% (-4bp)

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

Sovereign bond markets were little changed on Friday, with Italy the best performer following today's debt auction results, which saw the country pay the lowest yields on medium term debt since March 2010.

US bond yields rose marginally on the same day that the US trade deficit widened by 16% to $48.7bn in November, according to data published by the US Commerce Department. This was more than some analysts had predicted when they previously estimated the deficit would shrink to $41.3bn, and was attributed to an increase in consumer goods imports as a result of holiday spending.

Japan's R&I credit rating agency cut Spain's rating to BBB from BBB+ and Italy's rating to A from A+. Fortunately, the influence of such agencies in capital markets is still quite limited.

Meanwhile Goldman Sachs said Spain's five-year yield would drop to 3%.

JP Morgan slashed its Q4 German gross domestic product forecast to -2% from -1%, pushing down its Eurozone Q4 call to -1.8% from -1.5%. More worryingly perhaps, market commentary today chose to focus on recent OECD warnings about the lack of sufficient capital buffers at French and German banks. Ironically, save Greece most Eurozone periphery countries fared relatively well in the study.

The National Institute of Economic and Social Research reported that the UK economy remained flat in the last three months of 2012, once the data are adjusted.

Significantly, several companies announced plans to cut jobs. Some 1,370 jobs will go as high street camera retailer Jessops shuts down today. Online retailer Play.com announced it would shut down its retail business resulting in more than 200 job losses and Honda announced plans to cut 800 jobs at its Swindon manufacturing operation. Meantime, shares of HMV were under pressure on the London bourse.

RF

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