Bonds: Gilts rise after auction of long-term debt, Greece lags

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

US: 1.78% (+0bp)

UK: 1.42% (-2bp)

Germany: 0.13% (-4bp)

Spain: 1.47% (-6bp)

Italy: 1.30% (-9bp)

France: 0.47% (-6bp)

Japan: -0.08% (+3bp)

Greece: +9.29% (+20bp)

Portugal: 3.23% (-21bp)

Bonds rose across the board as the passing of several successful auctions of long-term debt across the continent eased supply constraints, while Greece underperformed due to the lack of an agreement between the government and its Troika of creditors aimed at obtaining the disbursement of its next tranche of aid.

The Debt Management Office sold £1.75bn of debt falling due in 2045, obtaining a bid-to-cover ratio of 2.08, versus the 1.73 seen at the previous sale of similarly-dated paper carried out in February.

Debt from the euro area periphery also staged gains, with market commentary referencing the passing of auctions of long-dated paper in the likes of France, on the previous day, and Italy, on Wednesday, as having removed an obstacle for markets.

The impact of reduced supply was particularly evident in the case of Portuguese bonds.

Italian bonds advanced even after the country auctioned €8.25bn of securities with various medium to long-term maturities, including one tranche of bonds falling due in March 2047; redemptions of a five-year issue on Friday were said to be propping up demand.

Acting as a backdrop, risk-appetite was on the up following better-than-expected Chinese trade figures referencing the month of March.

Exports from the Asian giant rose at a 11.5% year-on-year clip (consensus: 10.0%), while imports fell by a less than expected 7.6%.

US producer prices slipped by 0.1% month-on-month in March (consensus: 0.3%). In parallel, government figures showed that retail sales volumes in the US decreased by 0.3% month-on-month after a flat reading for February (consensus: 0.1%).

However, some analysts cautioned that headline weakness in the data might be misleading.

US retail sales were distorted by the timing of this year’s Easter holidays, Ian Shepherdson, chief US economist at Pantheon Macroeconomics said.

As well, the latest US factory gate prices revealed that core goods prices were no longer falling, he added.