Bonds: Gilts gain amid bank woes

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

US: 1.69% (+0bp)

UK: 0.87% (-2bp)
Germany: 0.01% (-3bp)
France: 0.31% (-2bp)
Italy: 1.34% (+1bp)
Spain: 1.08% (+1bp)
Portugal: 3.42% (-1bp)
Greece: 8.61% (+1bp)
Japan: -0.04% (-0bp)

Yields on longer-term sovereign bonds were mostly higher in the G-5 space at the end of the week, ahead of key central bank meetings and amid negative news-flow surrounding some of Europe´s largest lender.

Strikingly, US Treasuries brushed off stronger than expected consumer price data for August out in the States, a reaction which stood in sharp contrast of the dollar in on foreign exchange markets.

Deutsche Bank´s €1.75bn in 6.0% additional Tier 1 bonds, its first line of defence in case of a crisis, dropped by four cents to 80 cents on the on the euro.

Shares in the German lender were also sent more than 8% lower and attracted attention to the potential need for greater provisions at the likes of RBS.

The German lender was not the only one in the news either.

According to Il Sole 24 Ore, Banca Monte dei Paschi di Siena - the country´s third largest lender - might ask investors to participate in a debt for equity swap if a €5bn share sale faills to attract enough interest from investors.

That sent the Italian lender´s 5.6% to 2020 debt back to its lows from July, at 69 cents on the euro.

In parallel, Goldman Sachs strategists sounded a bearish note on long-dated sovereign debt, shifting their stance on the asset class to an 'underweight' on a three-month horizon.

"While rate volatility could pick up in the near term, we expect the most pressure in the back end and continued anchoring of the front end by central banks next week," they said.