Bonds: 10-year Gilt yields hit post-Brexit high

These were the movements among the yields on some of the most widely-followed 10-year bonds:

US: 1.80% (+6bp)

UK: 1.10% (+7bp)
Germany: 0.06% (+2bp)
France: 0.34% (+1bp)
Italy: 1.38% (+0bp)
Spain: 1.13% (+1bp)
Japan: -0.05% (+0bp)
Greece: 8.38% (-2bp)
Portugal: 3.30% (-7bp)

Ten-year Gilts retreated, pushing their yields sharply higher after the governor of Bank of England said: "We are willing to tolerate a bit of an overshoot [on inflation] to avoid unnecessary unemployment. We moved interest rates down to support the economy."

At one point during the session, the yield on the benchmark 10-year Gilt reached 1.15% - its highest since Brexit.

His remarks appeared to be somewhat less dovish than those made recently by other members of the Monetary Policy Committee on the same subject.

Speaking in Nottingham, Mark Carney also indicated that: "We are not going to take instruction on our policies from the political side."

"We care a lot about [income] distribution, but we are not a political entity," he added.

However, to an extent losses in Gilts mimicked those on similarly-dated US Treasuries which jumped even after Fed chair Janet Yellen indicated in late evening speech that there might be virtues to letting the country´s labour market run a little hot.

Acting as a backdrop, figures out earlier in the day showed Italy and Spain emerging from deflation in September.

Figures out overnight also showed Chinese factory gate inflation coming out from negative territory for the first time in over four years.

In terms of US data, Friday´s releases were mixed, with retail sales jumping rising by 0.6% month-on-month in September, as expected, but consumer confidence slipping back.

The University of Michigan´s preliminary consumer confidence index for October hit a 13-month low of 87.9, down from 91.2 in the month before (consensus: 91.8), as consumer´s exectations wilted.

"Perhaps the most concerning figure was a decline in the Expectations Index, which fell to its lowest level in the past two years, again mainly due to declines among households with incomes below $75,000. It is likely that the uncertainty surrounding the presidential election had a negative impact, especially among lower income consumers, and without that added uncertainty, the confidence measures may not have weakened," the University of Michigan said in a statement.

For his part, Andrew Hunter, economists at Capital Economics, told clients: "Despite the decline in October, the University of Michigan measure of consumer confidence remains at a fairly high level by past standards and consistent with a decent rate of real consumption growth.

"Accordingly, despite the weaker retail sales data released earlier today, we still expect consumption growth to slow only gradually over the rest of this year."

By the closing bell, Fed funds futures were assigning a 69.5% probability to a 25 basis point rate hike by the Fed at its 14 December policy meeting.