Bonds: Rate hike in coming months might become appropriate, Fed´s Yellen says

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

US: 1.85% (+2bp)

UK: 1.44% (+2bp)

Germany: 0.14% (-1bp)

France: 0.47% (-1bp)

Spain: 1.48% (-2bp)

Italy: 1.36% (-2bp)

Portugal: 3.05% (+3bp)

Greece: 7.26% (+7bp)

Japan: -0.11 (+1bp)

Federal Reserve chair Janet Yellen left the door open to an interest rate hike in "coming months" at the end of the week.

In an interview at Harvard University, economics professor Gregory Mankiw reportedly asked Yellen if she wanted to say something to move markets so that traders could leave and go to the Hamptons for the long weekend.

Her response was that it is "appropriate for the Fed to gradually and cautiously increase our overnight interest rate over time,” and going on to say “and probably in the coming months such a move would be appropriate.”

Although she continued to expect inflation to return to the central bank´s 2% target, she noted that there had not been much improvement in wage growth nor in the number of part-time workers who still said they wanted to work full-time.

Yellen also decried the rate of growth in productivity as "miserable".

“That’s a serious and negative development.”

As of 19:49 BST Fed funds futures were unmoved, pricing in a 34% chance of a Fed rate hike at its 15 June policy meeting.

However, her remarks did see significant swings in the major curency pairs, with euro/dollar down 0.73% to 1.1112.

The short part of the Treasury yield curve also saw some sharp moves, with the yield on the benchmark two-year note rising by four basis points to 0.91%.

On that note, earlier in the same day Stephen Major at HSBC told Bloomberg TV that he did not think two-year US Treasuries were expensive, because if the Fed raised rates twice more in 2016 and then stopped yields would then fall back.

Regarding Friday´s batch of economic data, the most noteworthy development appeared to be the improved consumer confidence readings seen in the US and France in particular, but also in the UK.

As Barclays´s Jesse Hurwitz pointed out, the final reading on the University of Michigan´s consumer confidence gauge for May saw a sub-index tracking current conditions set a fresh post-recession high alongside expectations bouncing back sharply from their recent declines, Barclays´s Jesse Hurwitz said.

To take note of as well, reports overnight from the G7 summit in Japan said prime minister Shinzo Abe would announce a decision to postpone a consumption tax hike that had been due to come into effect in April 2017.

Also out overnight, the latest available figures revealed that core consumer prices in the Tokyo area - a lead indicator for price pressures in the world´s third-largest economy - slipped to a -0.5% year-on-year clip in May (consensus: -0.4%).

In parallel, the leaders of Japan, the European Union, UK, France and Italy said they would accelerate negotiations aimed at finalising a trade deal before the end of 2016.