Bonds: Gilts dragged higher by rising global tide in prices

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

US: 1.58% (+0bp)

UK: 1.11% (-1bp)

Germany: -0.024% (-1bp)

France: 0.40% (+0bp)

Spain: 1.60% (+4bp)

Italy: 1.54% (+4bp)

Greece: 8.35% (+17bp)

Japan: -0.19% (-1bp)

Yields on benchmark 10-year Gilts slipped again, plumbing an intra-day low of 1.07% despite a much stronger than expected reading on UK retail sales volumes for the month of April which helped boost the outlook for the economy in the second quarter of the 2016.

Commenting on the sharp rise in retail sales, Dr.Howard Archer at IHS Insight said: "this gives a major lift to hopes that GDP growth is holding up better in the second quarter than had seemed likely given the mounting uncertainty surrounding next Thursday’s EU membership referendum."

The reason for what might appear to be as such an anomaly was the decision taken by US rate-setters, overnight, to sharply lower their estimates of how far policy interest rates in the States would rise by the end of 2018. The Fed funds rate was now seen reaching 2.4%, instead of the 3.0% they had projected in March.

In general terms, that meant that lower interest rates were needed than in the past in order to reach any given level of economic growth.

Yields on 10-year Bunds hit an intra-session low of -0.035% and those on Japanese JGBs at -0.21%. Australian 10-year debt also saw its yield plumb a fresh record low.

The yield on the 30-year US Treasury bond slipped one basis point to 2.40% on Friday, its lowest level in 16 months, having hit an intraday low at 2.37% - its lowest since February 2015.

As expected, the Monetary Policy Committee kept policy unchanged, but intensified the tone of its warnings regarding the potential for costly disruptions from Brexit not just to the UK economy but to those of its trading partners.

“The outcome of the referendum continues to be the largest immediate risk facing U.K. financial markets, and possibly also global financial markets,” the MPC said.

In an unexpected turn of events, BoE Governor Mark Carney cancelled the speech he had been set to deliver at Mansion House, after the killing of UK lawmaker Jo Cox earlier in the day.

To take note of, the Bank of Japan also kept its policy coordinates unchanged. However, the changes made by US central bankers to their forecasts for interest rates may have contributed to the furious pace of yen buying after the BoJ's own decision to stay put was announced.

Some analysts had argued that with no help from the Fed in sight, the BoJ needed to act forcefully if it wished to break excessive strength in the yen.

Commenting on the potential policy responses from the world's main central banks should Brexit occur, analysts at Danske Bank wrote: "Hence, we still expect 10Y German government bond yields to stay close to zero for the next six months even if we do not see a Brexit.

"If we do see a Brexit, the global downward pressure on yields is likely to intensify. The ECB will most likely come up with a policy response if it sees signs that the Eurozone economy is being affected, the Fed will effectively go on hold and the BoJ might have to react to an expected appreciation of the yen. In Sweden and Norway, a Brexit could also lead to further easing."