Bonds: Gilts outperform by wide margin

These were the moves in the most widely-followed 10-year sovereign bond yields:

US: 1.76% (-1bp)
UK: 1.47% (-6bp)
Spain: 1.59% (-2bp)
Germany: 0.16% (-4bp)
France: 0.53% (-3bp)
Italy: 1.50% (-1bp)
Greece: 8.62% (-13bp)
Japan: -0.12% (+0bp)
Portugal: 3.27% (+11bp)

Sovereign bonds pushed higher again on Thursday as strategists continued to weigh in with positive views on fixed income markets and another set of data underlined the slowdown in the UK economy, as the uncertainty surrounding the 23 June referendum weighed on the economy.

The results of survey compiler's Markit's latest service sector purchasing managers' index printed below forecasts and coming close on the heels of weak readings on similar PMIs for the construction and manufacturing sectors led Pantheon Macroeconomics's Samuel Tombs to tell clients that uncertainty had brought the recovery in Britain "to its knees".

Acting as a backdrop, investors were waiting on Friday's US jobs report with a lower than expected reading on he ADP payrolls report release on the previous day fanning speculation of a weak headline figure in the non-farm jobs report.

Speaking on Thursday evening, the president of the Federal Reserve bank of St.Louis, James Bullard, said the Fed policymakers' own forecasts for interest rate hikes over the short-to-medium term were likely closer to the mark, given tightness in the labour market, trends in prices (excluding those for oil) and lessened headwinds from "international influences".

However, in remarks made overnight his opposite number at the Federal Reserve bank of Minneapolis, Neel Kashkari, said that given low inflation the Fed needed to see further improvement in the labour market and to raise rates only it was certain the economy could weather a hike.

The odds of a June Fed rate hike were at 10.0%, versus 75.0% at the beginning of the year, pricing in futures contracts showed.

Spain's Treasury sold €489m in debt mayuring in 10 years' time at a yield of 1.592%, versus the 1.496% on offer the last time around, with Madrid having opted instead to sell €1.54bn in 2030 and 2040 instruments.

That saw the bid-to-cover ratio on the 10-year issue hit 4.33, its highest level since 2004.

In emerging markets, Turkish five-year bonds were sharply lower, boosting their yield by 25 basis points to 9.73% following the resignation of Prime Minister Ahmet Davutoglu.

Chinese steelmaker Dongbei Special failed to make a debt payment on 5 May, for a fourth consecutive time in two months, the Shanghai Clearing House said in a statement.

Odds that the rate of growth in China's economy might dip below 6% for four consecutive quarters over the period of 2017 to 2019 had increased from 20% to 25%, Deutsche Bank's chief China economist Zhiwei Zhang said in a research report sent to clients.