Bonds: Gilts edge higher after UK retail sales numbers

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

US: 1.75% (+1bp)

UK: 1.08% (-1bp)
Germany: 0.03% (-3bp)
France: 0.28% (-3bp)
Spain: 1.10% (-1bp)
Italy: 1.37% (-2bp)
Portugal: 3.21% (+2bp)
Greece: 8.44% (+0bp)
Japan: -0.07% (-1bp)

Gilts edged higher despite the release of a slightly weaker than expected reading on headline UK retail sales during the month of September.

Retail sales volumes were flat month-on-month in September, versus a consensus forecast for 0.3%.

Nonetheless, together with upwards revisions to the prior month's figures that meant retail sales in fact accelerated to grow by 1.8% over the third quarter after rising by 1.1% over the three months to June, as inflationary pressures are only increasing gradually and employment proving resilient for the time being, analysts explained.

Acting as a backdrop, in his post policy-meeting press conference European Central Bank chief Mario Draghi hinted that further quantitative easing might be announced following December's meeting.

An abrupt end to QE was not likely, Draghi said.

Stateside, investors were treated to a small barrage of fresh economic data, which was mostly upbeat, especially as referes to conditions within the manufacturing sector in the mid-Atlantic region.

The Philly Fed's index fell back to 9.7 from 12.8 (consensus: 5.0) but the key new orders gauge improved to a 23-month high of 16.3.

"The index is volatile and one good month proves nothing, but the 24.1-point swing in the shipments index and hefty increases in delivery times, inventory and the workweek are all consistent with the jump in orders. Employment,though, rose only marginally. A weighted sum of the components, mimicking the structure of the ISM survey, is consistent with the ISM rising to about 53, from 51.5. Nothing is guaranteed, but this is a better Philly report than we expected," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.