Bonds: Analysts left scratching their heads by market reaction to Draghi

These were the movements in the most widely-followed 10-year sovereign bond yields:

US: 1.94% (+6bp)

UK: 1.54% (+7bp)

Germany: 0.31% (+7bp)

France: 0.68% (+5bp)

Spain: 1.59% (+2bp)

Italy: 1.46% (+5bp)

Japan: -0.017% (-0bp)

Greece: 9.13% (-27bp)

Portugal: 3.13% (-3bp)

Gilts retreated after the European Central Bank unveiled a barrage of easing measures but appeared to signal that interest rates were unlikely to be headed lower still, with various analysts openly admitting that they were "left scratching their heads" by the markets' reaction.

The euro and sovereign bond yields headed sharply lower initially after the policy changes were announced at 13:00GMT but afterwards rebounded sharply as ECB president Mario Draghi apparently dismissed the need for further rate cuts at this juncture in remarks made during his press conference, which had kicked-off half an hour later.

“It’s a fairly long list of measures, and each one of them is very significant and devised to have the maximum impact in boosting the economy and the return to price stability -- we have shown we are not short of ammunition. From today’s perspective, we don’t anticipate it will be necessary to reduce rates further,” Draghi told reporters.

"The selloff in the rates market was a little more puzzling, the short end makes sense, but a long end selloff in the face of more QE was odd and hurt equities. We think equity markets will like it [...] Yes there may not be the added kicker of a weaker currency but the ECB was clear they were targeting credit creation in the domestic economy," Bank of America- Merrill Lynch analysts James Barty, Roman Carr and Tommy Ricketts said in a research note sent to clients.

To take note of perhaps, on 9 March the International Monetary Fund’s first deputy Managing Director, David Lipton, warned against countries employing policies aimed at weakening their currencies.