Bonds: Traders unfazed by weak data, wary of easing tensions in EM FX

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

US: 2.87% (+1bp)

UK: 1.24% (+1bp)

Germany: 0.32% (+2bp)

France: 0.68% (+1bp)

Italy: 3.12% (-5bp)

Spain: 1.45% (-1bp)

Portugal: 1.85% (+1bp)

Greece: 4.33% (+5bp)

Japan: 0.10% (+0bp)

The risk-off trade in sovereign bond markets came off a little on Thursday, but only that, amid a further rally in the Turkish lira and news that China and the US would restart trade talk in late August.

Allianz chief economic adviser, Mohamed El-Erian, appeared to give a resolution of the China-US trade spat the benefit of the doubt, but he was more cautious when it came to the outlook for Turkey.

In remarks to Bloomberg, El-Erian said: "Turkey is trying to rewrite the crisis management chapter in the playbook for emerging markets. It’s trying to go without interest rate hikes. It’s trying to do it without the IMF. That’s hard. It’s not impossible, but it's hard.

Against that backdrop, investors appeared to shrug off a report showing that retail sales in the UK shot up by 0.7% month-on-month in July, leaving forecasts for a gain of 0.2% in the dust.

Acccording to the Office for National Statistics, hot weather, the World Cup and online discounting tempted shoppers to open up their wallets.

Nevertheless, economists at Barclays Research sounded a wary note, telling clients: "However, as these temporary drivers fade, sales are likely to converge back to the underlying trend and we could see weaker sales growth for the rest of Q3."

Traders also appeared unfazed by much weaker-than-expected readings on US housing starts an the Philly Fed's manufacturing sector gauge referencing the months of July and August, respectively.