Bonds: Treasuries gain amid dovish Fedspeak, weak data

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

US: 2.15% (-1bp)
UK: 1.02% (-1bp)
Germany: 0.28% (-1bp)
France: 0.63% (+0bp)
Spain: 1.47% (+4bp)
Italy: 1.99% (+2bp)
Portugal: 2.92% (+6bp)
Greece: 5.68% (-20bp)
Japan: 0.06% (+0bp)

Gilts tracked similarly-dated US Treasuries lower at the end of the week, with dovish 'Fedspeak' and weaker-than-expected economic data weighing on the latter.

Speaking at the Park Cities Rotary Club in Dallas, on Friday evening Federal Reserve President Rob Kaplan said the central bank should be "very careful" about raising rates.

Earlier in the session, in an article posted on the Minneapolis Fed's website, his opposite number Neel Kashkari explained his reasons for voting against an interest rate hike at the central bank's policy meeting on 14 June.

"The labor market has tightened since we raised rates in March, but inflation has fallen. It doesn’t appear that we are moving closer to our inflation target. Inflation expectations appear flat or may even be drifting lower.

"[...] From a risk management perspective, we have stronger tools to deal with high inflation than low inflation. Looking at all of this together led me to vote against a rate increase. We should have waited for more data to see if the recent drop in inflation is transitory," Kashkari wrote.

Acting as a backdrop, the University of Michigan's consumer confidence gauge retreated only modestly at the start of June, slipping to 94.5 (consensus: 97.1) from an end of May level 97.1.

However, according to Richard Curtin, the survey's chief economist, Friday's preliminary data masked a much larger drop since 8 June, when Comey testified.

Prior to that event consumer confidence had averaged 97.7 but had since fallen to 86.7.

In the euro area it was all about Greece, as yields on its 10-year government debt fell to their lowest in over a month.

Overnight, euro area finance ministers completed the second programme review for Greece, agreeing to dispense a new tranche of €8.5bn in new loans for the stricken Mediterranean country, which would allow it to meet large bond repayments falling due in June.

They also agreed on a medium-term debt strategy for further debt relief, committing to increase relief should the country's economic expansion falter.

The International Monetary Fund also announced it would approve in principle a new stand-by credit line for Greece.

Commenting on Thursday night's developments, Antonio Garcia Pascual at Barclays Research said: "the next event for Greece will be the IMF board meeting on Greece (date not announced yet). Overall, we take today's outcome as good news for investors, as the IMF involvement and the enhanced debt relief commitments increase the chances of a better macroeconomic outcome for Greece in the longer term."