Bonds: Gilts, Bunds sold down on Fed statement, reduced haven flows

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

US: 2.35% (+3bp)
UK: 1.125 (+5bp)
Germany: 0.395 (+6bp)
France: 0.8335 (+2bp)
Spain: 1.60% (-1bp)
Italy: 2.25% (-1bp)
Portugal: 3.42% (-5bp)
Greece: 5.97% (-3bp)
Japan: 0.02% (0bp)

Gilt prices were dragged lower on Thursday by the relatively upbeat policy statement released by the US central bank overnight amid strong selling in bunds, pushing yields higher.

Rate-setters in the US described recent job growth as "solid" and brushed-off weak first quarter gross domestic product data as "transitory".

Although many analysts appeared to believe that it was a proverbial case of "much ado about nothing" Fed funds futures rapidly moved to price-in a near certain 25 basis point rate hike from the Federal Reserve at its next meeting, in June.

Nonetheless, two strategists pointed out the little changed pricing around a December interest rate hike from the Fed.

Closer to home, IHS Markit's UK services sector purchasing managers' index climbed to a reading of 56.2 for April from 54.8 for March, soundly beating a consensus projection of 54.5.

However, economists at Barclays had this to say: "While we acknowledge the strength of April, we refrain from reading too much into it long-term. The positivity in the UK April PMIs is consistent with positivity in the euro area.

"Likewise, for the UK at least, much of this has been driven by business-to-business, offsetting weakness from consumer spending. Firms are nonetheless cautious about the sustainability of this given continued elevated Brexit uncertainty as well as rising inflation."

In the euro area, the main piece of news was a speech from European Central Bank chief economist Peter Praet in which - according to some traders - he hinted at a change in the Governing Council's balance of risks at its June meeting.

Praet said 'forward guidance' can be addapted to reflect incoming data, although the sequence of policy actions should remain stable.

"These fundamental features of our forward guidance have a clear logic. All other features of our forward guidance are of a parametric nature and can be recalibrated depending on incoming data."

Noteworthy too for the risk spread between bunds and OATs, a snap poll conducted after the TV debate between Emmanuele Macron and Marine Le Pen showed the latter, the centrist reformist candidate clearly came out on top.

In parallel, a poll from OpinionWay-SLPV Analytics for daily Les Echos revealed that Macron's party En Marche! was on track to garner between 249 to 286 seats out of 535 in the assembly (from a total of 577) for Continental France in the 18 June ballot.