Bonds: Strong China manufacturing PMI sees risk appetite pick up

These were the movements in some of the most closely-followed 10-year sovereign bond yields:

US: 2.50% (+9bp)

UK: 1.05% (+5bp)

Germany: -0.03% (+4bp)

France: 0.37% (+5bp)

Spain: 1.14% (+4bp)

Italy: 2.51% (+2bp)

Portugal: 1.28% (+3bp)

Greece: 3.71% (-3bp)

Japan: -0.07% (+1bp)

Gilts retreated at the start of the new quarter as a better-than-expected reading on Chinese manufacturing sparked a bif of life into risk appetite across global financial markets, even as investors waited on the result of a round of indicative votes in Parliament.

Critically, Caixin's Chinese manufacturing sector Purchasing Managers' Index for March printed at 50.8, versus a reading of just 49.9 for the month before and economists' forecasts for a reading of 50.0.

Some economists were cautious about buying into the data too much, arguing that it might overstate the speed of the recovery in the Asian giant's economy, but traders nevertheless reacted by lightening up on their positions.

Adding to the wave of selling, overnight, and ahead of vice premier Liu He's trip to Washington later in the week for another round of trade negotiations, Beijing said it would extend a freeze on retaliatory tariffs on US car exports and add the opioid fentanyl to a list of controlled substances.

Stronger-than-expected readings on the US ISM manufacturing sector gauge for March and construction spending data for the previous month boosted sentiment further.