Bonds: Weak data pushes markets higher
These were the movements among the most widely-followed 10-year sovereign bond yields:
US: 1.51% (-5bp)
UK: 0.52% (-2bp)
Germany: -0.11% (-2bp)
France: 0.11% (-1bp)
Italy: 1.04% (-2bp)
Spain: 0.93% (+0bp)
Japan: -0.10% (-1bp)
Greece: 8.14% (-3bp)
Portugal: 2.7% (-4bp)
A barrage of weaker than expected economic releases Stateside pushed Treasuries significantly higher at the end of the week, dragging Gilts alongside them.
Friday´s news on the state of the US economy came against a backdrop of somewhat mixed data out of the euro area and China, together with a dour warning from the International Monetary Fund on the risks of excessive corporate lending in the latter.
To take note of, and as regards Gilts, Jim Reid at Deutsche Bank mused aloud about the breath-taking 54% return - 32% alone since Brexit - delivered by 50-year Gilts year-to-date.
Retail sales in the US were unchanged from the previous month, down from a 0.6% increase in June and missing expectations for a 0.4% gain, the Commerce Department revealed.
Core retail sales – which exclude auto sales – declined 0.3% following a 0.7% increase in June, marking the worst reading since January and falling short of expectations for a 0.2% advance.
On a more upbeat note, the University of Michigan´s gauge of consumers´ expectations improved from its late-July reading of 77.8 to 80.3 at the start of August.
In a separate report, the Labor Department said its producer price index for final demand declined 0.4% in July compared to a 0.5% increase in June and analysts’ expectations for a 0.1% rise. It marked the first decline since March and the largest since September 2015.
By the closing bell the yield on the benchmark two-year US Treasury note was off by two basis points at 0.7057% and the odds of a Fed rate increase in December had fallen back to 40.6%, versus 44.9% in the previous session, according to the CME Fed Watch tool, while the chances of an even larger hike by that same date were pegged at 4.3%.