Bonds: GIlts pushed higher by cautious ECB, underwhelming US tax cut plans

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

US: 2.30% (-1bp)
UK: 1.06% (-2bp)
Germany: 0.30% (-6bp)
France: 0.83% (-6bp)
Spain: 1.63% (-7bp)
Italy: 2.24% (-7bp)
Portugal: 3.46% (-11bp)
Greece: 6.38% (-3bp)
Japan: 0.02% (+1bp)

Government bond yields fell back again across the single currency bloc, but also those on Gilts as well as those on US Treasuries, as the European Central Bank sounded a somewhat more dovish note than the interest rate bulls had hoped for and the White House's tax cut plans underwhelmed.

ECB chief Mario Draghi sounded expressed greater confidence in the euro area economy, but cautioned that risks from overseas had increased even as underlying inflation is only seen rising gradually over the medium-term.

Unperturbed, Philippe Gudin and Antonio Garcia Pascual at Barclays Research told clients: "In June we expect a change to a less dovish and more symmetric forward guidance that would open the door for depo rate hikes in 2018. In particular, we would expect modifications possibly to both the forward guidance on rates and on QE by removing the explicit reference in the statement to a scenario with lower rates and/or higher QE."

On a more cautious note, Timothy Graf, head of macro strategy at State Street Global Markets, said: "the ECB is still unwilling to veer too far off their present course. Low core inflation is clearly weighing in their minds, suggesting policymaker caution will dominate for at least a few more meetings."

Roughly as expected, overnight the Bank of Japan announced that it was keeping all its main policy setting unchanged.

In parallel, it revised its forecasts for GDP growth in the fiscal year starting in April from 1.5% to 1.6%, while at the same time lowering its projection for core CPI from 1.5% to 1.4%.