Bonds: Traders increasingly eyeing August statement, despite US data, BoE actions

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

US: 1.59% (+9bp)

UK: 0.67% (+3bp)

Germany: -0.07% (+3bp)

France: 1.14% (+2bp)

Spain: 1.02% (-1bp)

Italy: 1.14% (-1bp)

Portugal: 2.87% (+1bp)

Japan: 0.09% (-2bp)

Greece: 8.32% (+1bp)

Gilts were one the worst performers at the tail-end of the week as a considerably stronger-than-expected US job report for July sapped the strength of bonds from the 'core' European economies.

Acting as a backdrop, US Treasuries suffered a sharp drop, pushing their yields higher, after the Department of Labor reported that non-farm payrolls rose by 255,000 in the previous month, easily exceeding the 180,000 which economists had on average penciled in.

The yield on the benchmark two-year US Treasury note gained eight basis points to 0.722%.

Nonetheless, the data out in the UK was less than remarkable, with the latest report from the Recruitment and Employment Confederation (REC) revealing that the UK jobs market suffered a “dramatic freefall” in July as the European Union referendum hurt business confidence.

The number of permanent jobs fell in July at the fastest pace since May 2009. Starting salaries for permanent jobs also rose at the slowest pace in more than three years.

"Economic turbulence following the vote to leave the EU is undoubtedly the root cause,” said REC chief executive Kevin Green.

Market-chatter following the REC data centred on the increasing importance of the August statement, given the need for fiscal policy to play a more active role to help prop up activity.

Alongside the above, the Halifax measure of house prices dropped 1% month-to-month in July, below the consensus forecast of-0.2%.

Nonetheless, Samuel Tombs, chief UK economist at Pantheon Macroeconomics was upbeat, telling clients: "The sharp fall in the Halifax measure of house prices in July likely reflects the usual volatility of the figures, not the impact of the referendum. Prices had leapt by 2.1% over the prior two months, so a correction would have been seen even if the market was in fine fettle. Like Nationwide’s measure."