Bonds: DMO sale oversubscribed, traders stay wary on Greece, euro area periphery

These were the movements in the most widely-followed long term sovereign bond yields:

US: 1.72% (-4bp)

UK: 1.38% (-6bp)

Spain: 1.49 (+3bp)

Germany: 0.10% (-3bp)

France: 0.44% (-2bp)

Italy: 1.27% (+3bp)

Portugal: 3.15% (+21bp)

Japan: -0.05% (+2bp)

Greece: 9.04% (+17bp)

Gilts jumped following a solid result at the Debt Management Office’s sale of £2.75bn in 5-year securities, the first since it modified the rules governing its auctions.

That followed a warning last month from DMO chief Robert Stheeman that an uncovered auction was a possibility.

In another boost for Gilts, the situation in Greece was continuing to fester, with unconfirmed reports citing Greek journalists surfacing on social media (and quickly picked up by at least two newswires) according to whom prime minister Alexis Tsipras might be considering calling snap elections.

DMO's sale on Tuesday was 2.01 times oversubscribed.

Elsewhere in the Eurozone periphery, 10-year Portuguese Treasuries registered their biggest slide in over two months, with Bloomberg reporting the country had appointed banks to reopen a dual tranche of 2022 and 2045 debt, subject to market conditions.

Acting as a backdrop, activity in the Eurozone’s services sector accelerated a tad in March, but by considerably less than analysts had expected, Markit’s latest purchasing managers’ index revealed.

The survey compiler’s euro area services PMI rose from 53.0 in February to 53.1 in March, well below the 53.7 consensus forecast.

National PMIs for France and Italy were particularly weak – although Spain managed to outperform by a hefty margin.

“In one line: Stable, but weakness in services is ominous,” Pantheon Macroeconomics said in a research note sent to clients.

To take note of as well, traders were keeping a wary eye on the strength of the Japanese yen - typically a poor omen for risk appetite globally - even after the end of the fiscal year.