Bonds: US Treasuries slip following latest Fed minutes

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

US: 3.18% (+2bp)

UK: 1.57% (-3bp)

Germany: 0.46% (-3bp)

France: 0.82% (-3bp)

Spain: 1.65% (+1bp)

Italy: 3.55% (+10bp)

Portugal: 1.95% (+1bp)

Greece: 4.33% (+4bp)

Japan: 0.15% (+0bp)

Gilts advanced on Wednesday, helped by a dip in Sterling and data showing a larger-than-expected slowdown in both headline and so-called 'core' consumer prices last month.

According to the Office for National Statistics, CPI fell from August's pace of 2.7% to 2.4% (consensus: 2.6%), reinforcing the conviction of analysts at Barclays Research that inflation was headed back "close" to Bank's 2.0% target in early 2019.

Yes, stronger UK wage data and price pressures further down the pipeline meant there were lingering upside inflation risks "but ultimately, what happens with Brexit is the most immediate concern with regard to price developments over the next year or so," they said.

Longer-dated Gilts were also tracking gains in similarly-dated US Treasuries, which had traded higher throughout most of the session and whose yields hit an intra-day low at 3.14%.

After the close of markets in London however, yields in the US were buoyed by the meeting minutes from when rate-setters at the Federal Reserve last met to decide on policy.

In the opinion of Ian Shepherdson at Pantheon Macroeconomics, the records of that meeting revealed "broad confidence" in the strength of the economic expansion but also "emerging worries" among US central bankers that the jobs market was a threat to future price stability and therefore required a period of interest rates above neutral.

Sheperdson's forecasts were for another 25 basis point rate hike from the Federal Reserve, the US central bank, when it next met on 18-19 December, followed by an additional four hikes over the course of 2019.

The shorter-end of the US interest rate curve also came under pressure following the Fed minutes, pushing the yield on the benchmark two-year note at that tenor up by two basis points to 2.88% as of 2014 BST.

On 3 October, Fed chair Jerome Powell had surprised some market participants by saying policy rates remained "a long way" from neutral.

Over the following two days, that had seen futures markets shift from pricing in roughly 56% odds of three rate hikes in 2019 to fully discounting a bit more than three, analysts at Rabobank explained.

As an aside, the latest monthly report from the US Treasury on long-term capital flows, released the day before, on Tuesday, had shown that China's holdings of US central government debt declined from $1.171trn in July to $1.165trn as of August, although market commentary appeared to be divided as to whether Beijing was paring its holdings in response to the trade war with the US or in order to buoy its currency.

The Russian Federation's holdings of Treasuries also fell, by $810m to $14.097bn.

At the start of the year they had stood at $96.89bn.