Bonds: Gilts outperform after weaker economic data
These were the movements in some of the most widely-followed 10-year sovereign bond yields:
US: 1.77% (+3bp)
UK: 1.08% (-1bp)
Germany: 0.02% (+2bp)
France: 0.30% (+2bp)
Spain: 1.11% (-1bp)
Italy: 1.39% (+2bp)
Greece: 8.42% (-2bp)
Portugal: 3.15% (-4bp)
Japan: -0.05% (0bp)
A stronger than expected reading on the state of the US factory sector helped push the odds of a 25 basis point rate hike by the Fed at its December meeting to 74.5%, according to Fed funds futures -a six-month high.
Somewhat ironically, that coincided with rather 'dovish' Fedspeak from two US central bank officials, the presidents of the Chicago and St.Louis Feds, with each arguing in his own way for a very gradual pace of rate hikes.
James Bullard, from the St.Louis Fed, was the most dovish of the two, apparently calling for just one additional tightening move.
Fed governor Jerome Powell and New York Fed chief William Dudley did not make any policy-relevant remarks on Monday, ahead of the start of the self-imposed 'black-out' before the monetary authority´s next policy decision, on 2 November.
Against that backdrop, Gilts outperformed as the Confederation of British Industry´s industrial orders index for October came quite wide of the mark (to the downside).
To take note of, the survey revealed that as many as 47% of the UK´s manufacturers believed the net impact of the weakness in sterling since the referendum had been negative.
During the CBI´s survey period the pound averaged 1.28 versus the US dollar, the business lobby said in a statement.
Eurozone bonds were generally higher following a large positive surprise on the macro front, as IHS Markit´s composite euro area output index jumped from 52.6 in September to a reading of 53.7 for October (consensus: 52.9).
Portuguese bonds did best on the heels of the decision by DBRS to reaffirm its investment grade rating on the country´s long-term debt after the close of trading in London, on 21 October.
Spanish bonds also advanced, albeit only slightly, after the country´s centre-left PSOE party paved the way over the weekend for a 10-month long political deadlock to be broken.
For her part, speaking from Hong Kong the Bank of England´s Minouche Shafik made the case for greater cooperation on financial regulation, given the international links between financial markets.
Nonetheless, she admitted that political considerations might prove an obstacle.
"The body of evidence required to justify including the interests of other nations in the setting of domestic policy is understandably large, even when the long run benefits would be to all. This is more true now than ever, as the unequal distribution of benefits from globalisation has increased scepticism about international cooperation."