Bonds: Fed´s Lacker says four rate hikes in 2016 would be gradual

These were the movements in the most widely followed longer-term sovereing bond yields:

US: 2.20% (-2bp)

UK: 1.83% (-2bp)

Germany: 0.55% (-5bp)

France: 0.89% (-5bp)

Spain: 1.69% (-5bp)

Italy: 1.57% (-6bp)

Portugal: 2.49% (-4bp)

Brazil: +30bp (16.29%)

Greece: 8.13% (-7bp)

Japan: 0.27% (-3bp)

Bonds gained across the board in the developed world, as risk aversion picked up across the G-10 space and the decline in oil futures lowered expectations for inflation in the Eurozone.

Long-term Gilts continued to track equivalent maturity US Treasury notes most closely.

Contributing to those gains, on Friday the President of the Federal Reserve bank of Richmond, Jeffrey Lacker, said that for him the Fed´s own forecasts pointing to four interest rates hikes in 2016 is what US rate-setters mean by a "gradual" pace of tightening.

"That's half the rate at which we raised rates in the last tightening cycle. So that's what 'gradual' means to me," Lacker reporteldy said.

"I hope we´re not behind the curve," he added.

His remarks stood in contrast with many analysts´ expectations for just two or three hikes in the Fed funds rate next year.

Spanish ten-year sovereign bonds advanced for a third day on hopes that Sunday´s presidental election will result in a market friendly government, although many political observers have told Digital Look it might take months to craft a working government in the Mediterranean country.

Some even believe that new elections might need to be called in about one year´s time.

The centre-right Partido Popular and the centrist Ciudadanos are expected to form some sort of coalition. However, the latter is wary of throwing its hat in the ring, given that much of its support is derived from ex-PP voters who are critical of the recent spate of corruption scandals.

However, in an apparent bid not to hinder Spain´s political and economic stability, which has been criticised in some corners as too idealistic, Albert Rivera has gone on record as saying he will not impede the PP from governing should it be the most voted party.

Germany aside - where economists´ inflation forecasts are being revised lower - the impact of oil price declines were also behind Standard&Poor´s decision to downgrade its rating on the Canadian province of Alberta from AAA to AA+ for the first time since 1992.

Further afield, on Friday Ukrainian prime minister Arseniy Yatsenyuk said his country will declare a moratorium on debt owed to the Russian Federation falliing due on 20 November.

In emergings markets news, Michael Gomez, head of emerging-market portfolio at Pimco wrote in a blogpost that: “On balance, we believe emerging markets are well-positioned to weather the Fed tightening cycle. Barring fresh bad news, we expect investors will look increasingly to EM for higher yield and carry, which should additionally support EM currencies.”