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

UK: 1.72% (-6bp)
US: 1.66% (-1bp)
Germany: 1.45% (-6bp)
France: 2.15% (-4bp)
Spain: 5.63% (-14bp)
Italy: 4.98% (-4bp)

[There are 100 basis points to a percentage point]

Growth worries -with the attendant lower inflation risks- seems to have been the dominant theme in today's trading session.

That despite the release of better than forecast economic indicators Stateside this afternoon and following weak economic data overnight in China and warnings on growth from IMF chief Lagarde.

While investors waited on the above the most relevant piece of news or "non-news" were the remarks out of Spain's Finance Minister, Luis de Guindos, to the effect that his country is still analysing the option of asking for a rescue, or not. Despite that there was some market chatter today regarding speculation and rumours surrounding a possible imminent Spanish rescue petition.

Acting as a backdrop, overnight IMF Executive Director Christine Lagarde told the British Broadcasting Corporation (BBC) that policy makers need to do more to provide greater certainty, especially in the Eurozone and in United States.

Chinese bank lending data for September also came out well below forecasts overnight. The country's lenders extended 623.2bn yuan ($99.5bn) of local- currency loans during the month of September, well below what was expected, which was 700bn Yuan.

On a more positive note, some Group of Seven nations raised the possibility of extra fiscal measures if the global recovery weakens, Canadian Finance Minister Jim Flaherty said after a G-7 meeting in Tokyo yesterday, Bloomberg reports.

Thus, and over in the States, the Thomson Reuters/University of Michigan preliminary October consumer sentiment index had been tipped to slide to 78.0 from 78.3 in September (Consensus: 74), but in fact rose to 83.1.

So-called "core" producer prices -which strip out the effect of changes in food and energy inflation- remained flat during the month of September, versus August, below the 0.2% gain expected.

Nevertheless, and possibly worth mention, the drop in net interest margins at US banks seems to be leading some observers to question the efficacy and sustainability of the current monetary policy settings.

Meantime, and back in the Eurozone, industrial production rose by 0.6% month-on-month in August (Consensus: -0.4%). In year-on-year terms output rose by 2.9%, versus the -4.1% expected.

Notably, the increased output was led by gains in durable consumer goods (3.9% month-on-month) and capital goods (0.7%). Geographically the largest rises -versus July's levels- were to be seen in France, Italy and Spain. Coincidentally, Deutsche Bank today issued a bullish research note on the Italian economy.

Ireland's trade surplus rose to €4.922bn in August from €3.923bn for the month before.

Lastly, the European Central Bank's own Ewald Nowotny was cited as saying that common bank supervision before mid-2013 is an impossibility.

AB

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