Bonds: Gilts jump ahead of ECB, US jobs report

These were the movements in the most widely followed longer-term sovereign bond yields:

US: 2.16% (-5bp)

UK: 1.76% (-6bp)

France: 0.82% (+4bp)

Germany: 0.49% (+2bp)

Spain: 1.54% (+2bp)

Italy: 1.44% (+2bp)

Portugal: 2.34% (+1bp)

Japan: 0.30% (-1bp)

Greece: 7.44% (-6bp)

Longer-term Gilts tracked a move higher in US Treasuries following weaker manufacturing sector survey results released on Tuesday on both sides of the Atlantic and ahead of the week's two key risks events, Thursday's European Central Bank policy meeting and Friday's US jobs report for November.

Markit's manufacturing sector purchasing managers' index fell to a reading of 52.7 for November, well off the prior month's downwardly revised reading of 55.2 and economists' median forecast of 53.6.

The drop was led by weakness in the SME space, prompting Barclays analysts Andrzej Szczepaniak and Apolline Menut to write: "This poses concern as SMEs account for approx. 50% of UK GVA and approx. 60% of all private sector employment.

"[...] Overall, we remain cautious in light of the continued divergence among different firm sizes and sectors given the importance SMEs play in the UK economy."

Earlier in the day, in its December report the Financial Policy Committee said the UK's financial system had exited the phase of heightened risk aversion that followed the financial crisis.

Eurozone manufacturing was the odd man out last month, with the same survey compiler's reading on euro area factory production printing at 52.8, as had been expected.

"Peripheral economies are doing better than the core countries. Although the recovery continues to gain momentum, the level of the Eurozone PMI remains relatively low, suggesting that the current pace of GDP growth is not able to reduce the large spare capacity in the economy at a fast rate," economists at BNP Paribas wrote in a research note sent to clients.

Nevertheless, those figures came out alongside better than expected unemployment figures out of the Eurozone's largest economy, Germany, and analyst chatter warning that the European Central Bank might not deliver quite the surprise that some analysts and market observers had been anticipating at its next meeting.

"The short-term market impact [of the ECB's eventual decision] is unclear. The problem is market expectations ahead of the meeting about the extent of the policy easing have become elevated despite clear signs of an improvement in the Eurozone economic data since the ECB’s last gathering. Investors have expressed this optimism about the likely policy measures by pushing down short-term yields and the euro.

"Therefore there is a clear risk then that markets are, for once, disappointed in Draghi," Macquarie Research said in a note sent to clients and dated 30 November.

Further afield, ten-year Russian government bonds gained, pushing their yields lower by four basis points to 9.58% as analysts at SocGen recommended clients buy rouble-based assets ahead of an expected rise in crude prices.

The French broker predicted the price of Brent oil would climb to $60 per barrel by the end of 2016.

To take note of, speaking after the close of trading in London Chicago Federal Reserve president Charles Evans expressed nervousness ahead of the rate decision.

In a speech in East Lansing, he said he would prefer to have more confidence than he currently does that inflation is indeed beginning to head higher before lifting interest rates.