Bonds: Greek bonds outperform, ECB officials push back

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

US: 2.04% (+1bp)

UK: 0.72% (-2bp)

Germany: -0.37% (+0bp)

France: -0.07% (+2bp)

Spain: 0.44% (+11bp)

Italy: 1.79% (+4bp)

Portugal: 0.49% (+6bp)

Greece: 2.10% (-5bp)

Japan: -0.15% (+1bp)

The focus at the start of the week was firmly on Greece, with longer-term bonds from the Mediterranean country trading sharply higher despite it being very much a risk-off day in government debt markets.

Greek 10-year government bonds outperformed after the centre-right New Democracy party won the country's general elections at the weekend and possibly an absolute majority in the Parliament in Athens.

Nevertheless, markets around the world were under pressure following the stronger-than-expected monthly US jobs report released on Friday.

On 5 July, the US Department of Labor reported a 224,000 jump in monthly US non-farm payrolls (consensus: 158,000), leading economists to shelve forecasts for a 50 basis point rate cut in short-term interest rates at the July Federal Open Market Committee meeting, although a 25 basis point reduction continued to be fully priced-in, Fed funds futures showed.

Against that backdrop, top policymakers at the European Central Bank appeared to be push back somewhat on forecasts in markets for lower interest rates.

ECB governing council member, Benoit Coeure, reportedly said on Monday that easier monetary policy in the euro area was needed bow "more than ever".

But in remarks to BFM radio over the weekend, Coeure had added a caveat, reportedly saying that "we have rates which are very low and we said we are ready to cut them even more if necessary."

In parallel, in an interview with broadcaster CNBC, another GC member, Villeroy de Galhau said: "We have several Governing Councils to come in the next months.

"If and when needed, there must be no doubt about our determination to act and our capacity to act. I repeat, if and when needed."