Bonds: Yields dive despite Fed holding door open to June Fed hike
These were the movements in the most widely-followed 10-year sovereign bond yields:
US: 1.86% (-6bp)
UK: 1.63% (-3bp)
Germany: 0.29% (-1bp)
France: 0.64% (+0bp)
Spain: 1.63% (-1bp)
Italy: 1.52% (-2bp)
Japan: -0.05% (+5bp)
Portugal: 3.19% (-4bp)
Greece: 8.99% (+39bp)
US Treasuries pushed higher, dragging Gilts along with them in their wake, despite the decision by rate-setters at the Federal Reserve to drop a reference to the fact that "global and economic financial developments continue to pose risks".
The initial reaction from economists was that the change in language from the Fed meant the central bank wanted to leave the door 'open' to an interest rate hike in June, although it was not the most likely scenario.
"The omission of the warning about global risks leaves the door open to a June rate hike, but whether the Fed follows through will depend on what happens in financial markets over the next six weeks.
"It isn't our base case scenario, but one risk is that another slump in sentiment, like we saw last August or this February, could prompt the Fed to delay yet again the next rate hike," Paul Ashworth, chief US economist at Capital Economics said in a research note sent to clients.
Figures from the Office for National Statistics revealed that the UK´s gross domestic product expanded at a 0.4% quarter-on-quarter clip in the first three months of 2016, down from 0.6% at the tail-end of 2015.
For some analysts the economy was likely to bounce back in the second half of 2016, especially assuming Britons voted to remain in the European Union.
However, in the opinion of Samuel Tombs, chief UK economist at Pantheon Macroeconomics, "the slowdown in GDP growth in Q1 reflects more than just Brexit risk. The intensifying fiscal squeeze, the uncompetitiveness of U.K. exports, and the lack of spare labour suggest that the UK´s recovery now is stuck in a lower gear."