Bonds: Gilts dip despite better-than-expected Q4 current account numbers

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

US: 2.39% (-3bp)

UK: 1.14% (+2bp)
Germany: 0.33% (-1bp)
France: 0.97% (+3bp)
Spain: 1.67% (+2bp)
Italy: 2.32% (+17bp)
Japan: 0.07% (+0bp)
Portugal: 3.98% (+3bp)
Greece: 6.99% (+3bp)

Gilts slipped at quarter-end despite data showing a sharp narrowing in Britain's current acciunt deficit, thanks to the large drop in the pound, although some economists cautioned that Sterling assets were still potentially vulnerable to waning confidence from foreign investors.

Indeed, perhaps for that reason and despite Friday´s small tick higher yields on benchmark 10-year Gilts continued to trade near their lowest levels since late October.

UK's current account shortfall narrowed from -£14.8bn for the three months to September to -£4.8bn in the latest quarter, driven mainly by surging exports of 'erratics', which Pantheon Macroeconomics said would not be sustained.

The deficit from investment income was also pared, to -£1.0bn from -£4.3bn as the drop in the pound boosted the Sterling value of UK residents' foreign assets. Those are already worth more than foreigners' holdings of British assets by the equivalent of 24% of GDP.

However, foreigners' pile of British assets still stood at 547% of GDP, so even if only a small number of investors took flight the pound would fall further, the same research shop said.

In the euro area, yields were mostly higher as French and German data on household consumption and retail sales, for February, pleased.

German jobs figures for March, also published on Friday, were especially strong, with unemployment claims down by a large 30,000 versus the previous month (consensus: -10,000).

Those data saw investors brush off a steep drop in the rate of euro area consumer price inflation for March to an annualised 1.5%, versus a 2.0% rate for February (consensus: 1.8%).

To take note of, Italian 10-year bonds sank, pushing the spread versus equivalent Spanish debt gaping wider.

Further afield, in the emerging market space, Venezuelan government debt maturing in 2027 lost another 3.4 cents to trade at 46.1 cents on the dollar amid small protests in Caracas after the country's Supreme Court invalidated the National Assembly, which is controlled by the opposition.

To take note of as well, Bloomberg noted the Indian rupee's very strong start to the year on the back of heavy interest in Indian stocks and bonds. The 4.7% rise in the rupee since 31 December marked its most solid first quarter performance since 1975.