Bonds: Investors outside the US take profits

These were the movements in some of the more widely-followed 10-year sovereign bonds:

US: 1.87% (-2bp)

UK: 1.57% (+3bp)

Germany: 0.30% (+3bp)

France: 0.64% (+3bp)

Spain: 1.65% (+10bp)

Italy: 1.52% (+10bp)

Japan: 0.06% (-1bp)

Portugal: 3.03% (+10bp)

Greece: 9.47% (+15bp)

Divergence was again the name of the game in sovereign bond markets as investors in the Eurozone, with the UK included this time around, apparently opted to book profits after recent sizeable gains, even as rate hike expectations in the US appeared to recede again, with the US dollar to be seen on the backfoot.

Out in the Eurozone, some market commentary referenced doubts among traders about just how much further stimulus from the European Central Bank they were warranted in expecting.

In that same vein, after the close of markets BNP Paribas´s interest rate team said to clients that the fall in global bond yields after the Bank of Japan´s decision to slash its interest rate on excess reserves held on deposit at the central bank was unsustainable.

It added that: "in cross-asset valuation terms, 10y bonds now look expensive versus equities in the Eurozone and at neutral levels in the US.

"However, in the longer-term, structural forces should support a renewed decline in bond yields in H2 2016, especially in the Eurozone."

Related to the French broker´s thesis for the longer-term outlook, speaking from Frankfurt on Thursday morning European Central Bank president Mario Draghi listed the multiple reasons why, in his opinion, the risks of not acting easily outweighed any concerns about acting decisively should it be deemed necessary.

"There are forces in the global economy today that are conspiring to hold inflation down. Those forces might cause inflation to return more slowly to our objective.

"In the euro area, that might create different challenges than it does in other jurisdictions. But those challenges can be mitigated. They do not justify inaction," Draghi said.

"There can be no doubt that if we needed to adopt a more expansionary policy, the risk of side effects would not stand in our way," he added.

The situation in the Gilts market was similar to that in the euro area, with the minutes of the Monetary Policy Committee´s last interest rate meeting highlighting the continued uncertainty surrounding the lack of wage growth, despite a tight labour market.

Here too, a reference from Bank of England Governor Mark Carney that the next move in Bank Rate would be higher caught the eye of some pundits, given that some traders had even begun to speculate with a cut in rates.

Nonetheless, Dr. Howard Archer, chief UK+European economist at IHS Global Insight had this to say on the subject: "We no longer expect the BoE to hike interest rates in 2016. With the Bank now expecting GDP growth to be below-trend over 2016 as a whole and consumer price inflation expected to not reach 1.0% before the end of the year, it is hard seeing the bank acting."

"However, we do think the Bank of England will start gradually edging interest rates up in the early months of 2017, on the assumption that GDP growth has firmed, consumer price inflation is above 1.0% and gradually trending up, and earnings growth has firmed significantly."